Financing Constraints,Payment Methods And Corporate M&A Performance

As an important way for enterprises to expand market share,optimize resource allocation and enhance value,mergers and acquisitions have been widely praised by enterprises in recent years.With the vigorous development of China's economy,mergers and acquisitions led by Chinese enterprises are on the rise.Both the transaction amount and the number of transaction events have reached new highs.The gradual improvement of the capital market has made mergers and acquisitions payment methods diversified from a single cash payment.Determining the appropriate payment method is a key link in M&A activities and one of the important reasons for the significant differences in corporate M&A performance.Most research on mergers and acquisitions is based on the potential premise that the company is not subject to financing constraints,which means that the acquirer can choose the appropriate merger and acquisition payment method and financing method from its own perspective.However,this is not the case.In imperfect capital markets,the financing channels of enterprises are not smooth and there are financing constraints.Relevant research at home and abroad shows that,for preventive motivation,financing-restricted companies tend to retain more internal funds in order to reduce financial risks and alleviate the problem of underinvestment in order to cope with expensive external financing costs.Therefore,financing constraints are an important issue for companies to consider when choosing a payment method.Strengthening the research on the relationship between financing constraints,payment methods and corporate M&A performance is beneficial for Chinese enterprises to choose the appropriate payment method in light of their own actual conditions and promote the improvement of corporate M&A performance.It is closer to reality and more practically meaningful.This article uses the successful mergers and acquisitions of Shanghai and Shenzhen A-share listed companies from 2014 to 2016 as a research sample.The sample range is from 2013 to 2018.Based on the performance of the enterprise in the year before the merger and acquisition as the benchmark,investigate the changes in M&A performance of sample companies in the year and two consecutive years after M&A.In the empirical research part,first,the relationship between financing constraints and M&A payment methods was tested;Then,based on a comprehensive analysis of the influencing factors of M&A performance,it is tested whether financing constraints will promote or reduce M&A performance and the impact of different payment methods on corporate M&A performance.Finally,the relationship between financing constraints,payment methods and M&A performance is discussed.The research results show that:(1)Financing constraints faced by companies in the process of mergers and acquisitions will prompt them to use non-cash payment methods;(2)Financing constraints imposed on enterprises will directly affect corporate M&A performance,and the higher the degree of financing constraints,the better the performance;(3)Enterprises choose non-cash payment methods in M&A transactions,which is more conducive to the improvement of M&A performance,and in the relationship between financing constraints and M&A performance,payment methods play a part of intermediary role.In further research,Non-cash payments are divided into stock payment methods and hybrid payment methods.After incorporating financing constraints,we can find that for companies with a higher degree of financing constraints,hybrid payment methods have a better effect on promoting merger performance than stock payment methods.