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Empirical Research on the Influence of M&A to Operating Performance

Author: WangHai
Tutor: LuoChaoZuo
School: Southwestern University of Finance and Economics
Course: Accounting
Keywords: M&A Performance of M&A Cash Flow Returns Ratio on Assets Overhead expenses on Assets Financial expenses on Assets
CLC: F276.6;F271;F224
Type: Master's thesis
Year: 2008
Downloads: 234
Quote: 0
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Abstract

First of all, the economic background of study and issues raised.(1) The economic background of studyM & A is the eternal theme of national securities market. In recent years, as China joining in WTO, the forms of Mergers and Acquisitions (M&A) become multiplicities and the scope of M&A is expanding. So the activities of M&A increase continuously in China. The reasons are as follows:First, macroeconomic drivers. In recent years, economy in the world has entered a degree of slow growth or even downturn phase, only China’s economy----the brightest spot in the world, has great appeal for many investors.Second, market competition-driven. The Chinese market has experienced more than 20 years’baptism; various sectors of the market have already entered the stage of the fierce competition. In face of the fierce competition in the market, through large-scale enterprises to reduce costs and spread the risks, and result in industrial consolidation and cross-sector expansion becomes inevitable.Third, the rise of China’s private enterprises. Along with the defects of state-owned enterprises are continually exposed, the private economy has shown tremendous vitality in corresponding area. The development of private economy in China is being integrated into the mainstream of economic development. Especially after China’s latest amendments, the "Securities Act" and the "Company Law" will come into operation on January 1, 2006, 30 percent of the tender offer exemption threshold will be lowered to the private economy, and a new round of corporate mergers and acquisitions becomes facilitated.(2) The proposed issueCan M & A bring all the synergies that people expected? What leads to corporate merger, and what factors play a decisive role on the success or failure of mergers and acquisitions? From a realistic point of view, the success rate of corporate mergers and acquisitions is relatively low. According to the census data shown that the M&A failure rate is as high as 50%-80%. The United States magazine, "Business Week", study revealed that 75 percent of enterprises’mergers and acquisitions are of a total failure. All the records of successful M & A are not encouraging.Since the beginning of reform and opening up, many star enterprises in China suddenly collapsed after rapid expansion. The failure of many businesses is more related with the failure of CEO, and their failure often brings disaster to the enterprise. What makes these enterprises manage mergers and acquisitions? Do mergers and acquisitions have effect or not? Then what makes these enterprises rapidly collapsed?Then, the content and viewpoint.The first chapter is on the background and significance of the theoretical analysis of mergers and acquisitions. It is mainly about literature summary. First, summarize the phenomenon results of the research from the 1930s of Western scholars. These scholars often adopt the method of market research and financial indicators to study merger reorganization events. Then, summarize the results of domestic scholars in this field. Major theories of domestic M & A include some of the theoretical results since the 1990s. Finally, it discusses shortages of domestic research such as the existing law does not take into account mergers and acquisitions, and does not consider issues such as base of comparison in performance.The second chapter is about the model of western merger and reorganization and options of evaluation index. First, it introduces the definition of assets、concept of assets reorganization from the allocation of resources, the reorganization of property rights, system innovation and other theory perspective. Secondly, it lists the main mode of reorganization about M&A Western countries. Finally, the paper explains the choice of cash flows, management fees and finance charges indicators to evaluate the performance of the M & A businesses.Chapter Three is about empirical analysis of business performance after M&A acquisitions. It researches on the basic assumption, the source of research data, the choice of samples and empirical research methods, and draw relevant conclusions. In order to analyze the problem, writer constructed three models to practice logistic regression. Chapter Four, we get conclusion of the study and the limitations associated with the proposal. This paper is based on previous research, with further introduction of analytical methods of economics and behavioral finance, and studies the company’s financial activities from a new perspective.Although in this paper, we have considered various aspects and collected all the possible use of resources, but a certain amount of limitations still exists, such as shorter time span of sample data and smaller sample volume.Thank you all for your kind comments.

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CLC: > Economic > Economic planning and management > Economic calculation, economic and mathematical methods > Economic and mathematical methods
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