Empirical Study On Payment Methods,Sources Of Funds And M&A Performance

In recent years,mergers and acquisitions have gradually become the focus of the capital market owing to the influence of economic restructuring,industry integration and corporate strategy et al..Mergers and acquisitions are activities with complex processes and numerous businesses.In many aspects,M&A financing and payment are the core aspect in the M&A process,which has a profound impact on the M&A process and the performance of the company which after the merger.There are two main payment methods in China's M&A activities,cash payment and stock payment.It is of great significance to study the relationship between payment methods and M&A performance,and to guide enterprises how to choose the payment method that is most conducive to the development of enterprises after mergers and acquisitions according to their own characteristics.In addtion,because of the huge amount of M&A transactions,when companies decide to use cash to pay for M&A transactions,the source of funding is also very important.Sources of funds include own cash financing,equity financing and debt financing.Different sources of funds are related to the cost of M&A projects,corporate financing constraints and corporate governance.They will release different market signals,which will affect the future development of the company.According to the theoretical basis like signal transmission theory,risk sharing theory,MM theory and trade-off theory,this paper proposes seven sets of hypotheses.Then,based on the 2014-2016 M&A sample,this paper uses the event research method to conduct a single factor analysis and multiple regression analysis on CAR and BHAR before and after the merger,and examines the impact of payment methods and funding sources on M&A performance.The empirical results show that the M&A event will have an impact on the market performance of the M&A company,and there will be significant wealth appreciation in the short term;the performance will decline in the long run.Under different payment methods,stock payment can significantly improve short-term performance and significantly improve long-term performance;cash payment is beneficial to enhance short-term performance,but it is not conducive to enhance long-term performance.Regardless of short-term or long-term M&A performance,the M&A performance of stock payments is significantly better than cash payments.For funding sources,equity financing can significantly improve short-term performance and significantly improve long-term performance;self-owned cash financing is conducive to enhancing short-term performance,but not conducive to enhancing long-term performance;debt financing will not significantly enhance short-term performance,but will significantly reduce Long-term performance.Regardless of short-term or long-term M&A performance,equity financing is significantly better than self-owned financing and debt financing.There is no significant difference between self-funded financing and debt financing.Finally,through theoretical and empirical analysis,this paper encourages enterprises to use stock payment and equity financing,recommends the state to optimize the bank loan system and encourage enterprises to use innovative payment methods and financing methods from the perspective of improving corporate governance mechanism and improving the M&A market.