An Empirical Analysis On Hostile Takeover Effect Of China's Listed Companies

It has not been long time since China's security market was founded in 1990. With the development of China's security market, M&A has been on its way too. A lot of useful research are conducted on merger and acquisition in China and performance improvement caused by M&A. Researches on performance of M&A is conducted on two respect: one is to evaluate the reaction on the secondary market by calculate the abnormal return after M&A. Because the history of China's security market is not long, the ownership structure of listed companies is not sound yet, relevant law and regulation is inadequate either. Although some scholar has demonstrated that China's stock market is weakly efficient, the fluctuation of stock price is not enough to illuminate the performance change after take-over event is announced. But we can use it to evaluate the performance information of take-over announcement and investors' anticipation about M&A. The other respect is the change of key financial index of aimed company before and after M&A reflects the actual performance improvement of the company. Single financial index cannot reflect the performance improvement of the company, so most scholar select a series of index to construct a general function that can weigh the enterprises' performance across-the-board.More and more hostile acquisition appears in China with the development of China M&A wave. The first M&A event in China's listed companies is the first hostile acquisition event in China. Although it was beyond many people's imagination, it did earn good comment. After getting to a peak in 2000, 2001, the hostile acquisition has been getting dim.Though there are a lot of publications on performance of M&A in China securities market, there is no research on performance improvement of hostile acquisition of Chinese public company. This paper tries to find the performance improvement of hostile acquisition by above-mentioned two methods, based on existing research. Through above conclusion we have made a basic analysis about the problems in China's market and make a primary discussion about the problems. We hope this paper may get some attention by other researchers and they can make further research on hostile acquisition performance.