Research On The Impact Of M&A Payment Methods On M&A Performance

The M&A wave in China has entered a peak period since 2013,with its number and scale remaining at a high level.Despite the large number,there are few cases that can truly optimize the allocation of resources through mergers and acquisitions.In the process of mergers and acquisitions,although the choice of the acquired party will have a significant impact on the future development of the company,the choice of the payment method for the merger,under the condition of the selected acquirer,often affects the cooperation between the acquirer and the acquired,as well as the corporate governance level and corresponding business performance of the acquirer afterwards.Therefore,the choice of payment methods in mergers and acquisitions has become an important issue of concern both to the theoretical community and to practitioners.Though the impact of mergers and acquisitions on company performance,the influencing factors of M&A payment choices,and the impact of M&A payment methods on the short-term performance of M&A parties have been widely studied by scholars at home and abroad,the researches on the influence of M&A payment methods on the long-term performance are not very often seen.Through the observation of China's A-share market,this paper discusses M&A payment methods through literature review,theoretical analysis,and status quo analysis of Chinese listed companies' mergers and acquisitions.This paper also presents two basic assumptions about the impact of medium-and long-term and short-term performances: The short-term market performance of the share-based payment method is better than the cash payment method(hypothesis 1);compared to the cash payment method,the medium and long-term business performance is better(hypothesis 2).These two assumptions are examined by 2013-2017 M&A data.The results show that(1)whether the short-term performance is measured by the stock price cumulative return rate one day before and after the merger,or the cumulative return rate from 1 day before to 5 days after the merger,the short-term performance of the merger increases with the proportion of the share-based payment.(2)Based on Wind's financial scoring model(including operational capability,solvency,profitability and development capability)and mid-and long-term business performance measures constructed by principal component analysis,the medium and long-term performance of M&A also increases with the proportion of share-based payments.In the context of current M&A payment methods(mainly including share-based payments and cash payments),the above two results can be interpreted as: compared with cash payments,share-based payments can lead to better mid-and long-term and short-term M&A performance.In summary,the novelty of this paper lies in the mid-and long-term business performance measurement based on Wind's financial scoring model and principal component analysis,which further reveals that with the increase in the proportion of share-based payment,the M&A performance of the acquirer is also on a rise.