The Impact Of Supplementary Fund-raising Policy On M&A

Based on the double difference(DID)model and the event research method,this paper examines the impact of the fund-raising policy by the CSRC in April 2015 that the proportion of the funds raised is expanded and enterprises need to clarify the use of the raised funds on M&A enterprises and capital markets.The acquisition of listed companies in Shanghai and Shenzhen listed companies as a sample,this paper uses profitability,solvency,operating capacity,and development capacity and cash flow of financial indicators to measure the impact of mergers and acquisitions and use corporate valuation and indicators whether M&A is the cross-industry to measure the impact on capital markets.The results show that for the M&A enterprises,the new policy makes the listed companies get more free funds,the valuation level is improved,the financing conditions are more convenient,and the specific use of the matching fund is more standardized and clear so that such disclosure of information helps investors to make investment decisions.However,the more abundant cash flow did not significantly improve the profitability and operational capacity of listed companies,but significantly reduced solvency.For the market,the market gives rather positive feedback once the new policy released.The valuation of stock has been push to a new level.However the value of shell is further fried high at the same time,to some extent increasing the cost of business backdoor listing.Since the enterprises can obtain more free cash flow,they more tend to conduct cross-industry mergers and acquisitions and grasp more votes regarding decision making,which increase the investment risk for small investors and market volatility.The research of this paper enriches the literature on the impact of M&A on the M&A,and the research conclusion is of great significance to the M&A enterprises to improve the performance of M&A,protect the interests of investors and maintain the market order.