| Currently, the security market has become an important place for resource allocation optimization. M&A of listed company is featured with large scale, strong social effects and involves large transference of human resource, material resource and financial resource. It has become a crucial factor that affects the sustainable development and the long-term stability of the capital market.The first part of the paper is the introduction and literature review. In this part, the author introduces the research subject and the current research achievements on this topic.The second part introduces M&A theories and development history of M&A in China and western countries. Firm development theories indicate a firm's development strategy would at certain stage affect the firm's acquisition decision. In this part, the author also presents the theories suspecting M&A efficiency and those supporting it. These theories offer different opinions on M&A effects, which form the theoretical basis for our further research.The third part is the empirical research on M&A performance. Firstly, the author introduces the research methodology. In this paper, firm's M&A performance was evaluated by comparing the its EVA before acquisition and that after acquisition. Currently, 70% of China's publicly traded companies were consuming value rather than creating value for their shareholders (Liu Shaojia, 2002.2). By using EVA as the major performance criteria, we could strongly encourage optimal capital restructuring, and at the same time, it could help reducing acquisitions purely aimed at speculative and based on short-term statement manipulation. Moreover it couldhelp protecting shareholder's profits and enhancing firm's value.Then the author studies 42 acquisitions at China's security market in 2000. Among them, listed companies acted as target firms in 20 cases, and, in the other 22 cases, listed companies were buyers. The research on the 20 shell company acquisitions shows that average EVA of the target firms increased greatly in the first year of acquisition while in the second year it dropped significantly. In the third year, average EVA increased again compared with that of the second year. From this, we could see that some acquisitions were only "short-term statement acquisitions". By presenting a statement with false information, the firm's good performance of the acquisition year could be "made". Whereas, some firms' performance really improved after acquisition. EVA of these firms would usually keep unchanged or even drop a little in the first and second year of acquisition. But in the third year, the firm's EVA increased appreciatively. This was because one acquisition's performance would only begin to show after a certain period of post merger activities.The other 22 cases were acquisitions in which listed companies acted as buyers. The efficiency of these cases was low. From the acquisition year, the firms' EVA decreased one year after another. But nevertheless, some firms' performance improved after acquisitions. This can attribute to the profitable target firm and diversification of buyer's business. However, some firms' good performance was achieved through affiliated transactions. Because of the frequent investment activities and affiliated transactions of China's publicly traded companies, the real effects of one acquisition could hardly be told.Took the 42 acquisitions as a whole, we found the performance of those acquisitions was far from satisfactory. In the first two years, average EVA of 42 firms decreased a lot compared with that before the acquisition. But in the third year, the performance improved when comparing with the second year. From this, we can see the importance of post merger activities. The author also studied the relationship between M&A and stock price on the secondary market. It seemed that the stock price of those firms with bad acquisition performance usually rose appreciativelyaround the acquisition announcement period. It indicates that those acquisitions mainly...
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