Transaction Premium, Target Company Shareholders And M&A Performance

M&A is the abbreviation of the term “Mergers and Acquisitions” which refers to the combination of two or more independent companies into one.Recently,the transaction scale of listed corporations merging and acquiring new OTC market listed companies has been continuously expanding in China,which plays an important role in Chinese M&A market and has a significant impact on China enterprises development,but it is a pity that this phenomenon has not attracted the attention of Chinese academics.Because of the following phenomena in new OTC market listed companies: concentrated ownership,imperfect corporate governance structure,relatively low quality of information disclosure,and dominant controlling shareholders,main corporation has to encounter the risk of information asymmetry and moral hazard.What's more,it will influence M&A performance of listed corporations.Therefore,it is necessary to analyze the M&A performance of listed companies in the acquisition of new OTC market listed companies from the perspective of the controlling shareholder of the target company.This thesis firstly describes the characteristics of the governance structure of new OTC market listed companies and analyzes the impact on the M&A performance of listed companies.Considering the high control and influence of the major shareholders on new OTC market listed companies,the controlling shareholder of the target company is selected as the adjustment variable.Secondly,based on the theory of information asymmetry and signal transmission,the theoretical hypothesis of the relationship between transaction premium and M&A performance is proposed.Thirdly,the thesis analyzes the controlling effect of the shareholder of the target company on the relationship that mentioned above,and put forward three hypotheses according to the analysis frame: whether the controlling shareholder of the target company continues to hold shares;whether it is concurrently employed,and whether to make research hypotheses for the founder.Finally,carry out hypothesis verification and robustness test and give corresponding suggestions.This thesis takes 92 M&A transactions of listed companies as the research object which are listed on the Shanghai and Shenzhen Stock Exchanges in 2013-2017,and defines M&A performance as market performance and accounting performance respectively meanwhile multivariate linear regression analysis is used for statistical test.The conclusions and innovations of this thesis are as follows:Taking the listed companies' merger and acquisition of new OTC market listed companies as the research object,this paper studies the characteristics of new OTC market listed companies,such as dominance of controlling shares,imperfect governance structure and low quality of information disclosure.It highlights the differences in governance structure between two parties and their impact on the performance of merger and acquisition to make up for the shorts of existing literature.There are two contradictory conclusions and theoretical explanations about the relationship between transaction premium and M&A performance.This paper divides the performance of M&A into market performance and accounting performance,and verifies the signaling function of transaction premium.The research finds that in the merger and acquisition of listed companies,transaction premium has signaling effect.The higher the transaction premium,the better the market performance and accounting performance of mergers and acquisitions.In view of the unique characteristics of the new OTC listed companies,this thesis selects the controlling shareholders of the merged companies as the adjusting variable,examines the moderating effects of the characteristics of two-position concurrent,continuing shareholding after merger and acquisition,whether the founder shareholders or not on the relationship between transaction premium and merger and acquisition performance,and explains its internal mechanism.The study finds that after M&A,the controlling shareholders of the target companies continue to hold shares,which negatively regulates the positive relationship between transaction premium and M&A performance.Dual concurrent positions of controlling shareholders in target companies weaken the positive relationship between transaction premium and market performance,but enhance the positive relationship between transaction premium and accounting performance.When the controlling shareholder of the target company is the founder,the positive relationship between transaction premium and market performance is enhanced,but the relationship between transaction premium and accounting performance is not significant.