Trade Credit And Performance Of M & A

The report of the 19th national congress pointed out that "China's economic development has changed from the stage of rapid growth to the stage of high-quality development".As an important carrier of M & A,the improvement of M & A performance is one of the important ways to achieve high-quality development of national economic transformation and upgrading.The improvement of M & A performance can not be separated from the support of capital.However,the existing literature mainly focuses on self owned capital,debt financing and equity financing when exploring the impact of financing methods on the company's M & A performance based on the institutional background of our country.Especially,in the aspect of debt financing,the paper mainly discusses the impact of formal finance dominated by bank credit on the performance of M & A,while neglects the possible role of informal finance represented by trade credit.In fact,China's financial development is not perfect.The development of informal financial system can make up for the loss of function and efficiency of formal financial system to a certain extent,and play an important role in the transformation and development of enterprises.As one of the important sources of corporate debt,trade credit financing has both the function of financing and governance.However,most of the studies separate the two,which is obviously biased.In view of this,this paper puts the financing function and debt governance function of trade credit into the same research framework,explores its possible impact on the performance of M & A and its specific path of action,and further explores whether this effect is affected by the development level of external financial intermediary and the legal environment of the region where the company is located.This paper takes the merger and reorganization of A-share listed companies in Shanghai and Shenzhen in 2003-2016 as the research object,and discusses the impact of trade credit on the performance of merger and acquisition,the specific mechanism and the difference of this effect in different external environments.The results show that:(1)Trade credit significantly promotes the performance of M & A,and this effect is more obvious in areas with low development level of financial intermediaries and poor legal environment.In terms of the impact on M & A performance,there is an alternative relationship among financial intermediary,legal environment and trade credit,which shows that trade credit can make up for the functional vacancy and efficiency loss of formal financial system and legal system.(2)The mechanism test shows that trade credit as a whole improves the performance of M & A by giving full play to debt governance effect and alleviating financing constraints,but there are also differences in the role played by different property rights.Specifically,in the state-owned enterprises,the trade credit mainly restrains the agency problem of the enterprises by exerting the debt governance effect,and then promotes the M & A performance of the companies;in the private enterprises,the trade credit mainly plays the role of alleviating the financing constraint,which improves the M & A performance of the companies.(3)Further research shows that the inhibition of trade credit on the agency problem of state-owned enterprises is mainly reflected in the first type of agency problem of managers' self-interest behavior,and the inhibition effect on the second type of agency problem of large shareholders' interest encroachment is weak or even nonexistent;the alleviation of private enterprises' financing constraints mainly comes from their own resource effect rather than signal effect.The conclusion of this paper not only enriches the literature research on the influencing factors of M & A performance and the economic consequences of trade credit financing,but also reveals the feasibility and importance of informal finance to help the main and parallel companies create M & A value by improving the governance mechanism and reducing the financing constraints,which provides new evidence for the promotion of M & A performance from the perspective of informal finance,and has certain reference significance for promoting the transformation and upgrading of Chinese enterprises through M & A.