Influence Of Securities Companies’ Participation On Chinese Listed Companies’ M&A Performance

M&A is a general term of mergers and acquisitions which are two kinds of financial activities.As an important way of external expansion, it has been developed over one hundred years in Western countries and over twenty years in China. With the growing trend of market liberalization, M&A has become more and more enterprises’ first choice for its high efficiency when they consider their expansion strategy. The securities company is a financial institution whose main line is capital market business.From the first time of M&A wave set off in the USA in the end of the19th century, securities companies’M&A business began to develop and has become one of the core business of securities companies today in Western developed countries. In the continuously active domestic M&A market, M&A business of Chinese securities companies are developing rapidly. M&A services have been accepted by more enterprises. It is said in China Venture’s statistical report that during the first eleven months of2011there are440M&A events, in which the independent financial advisers are published. These independent financial advisers involve50Chinese securities companies whose headquarters are in mainland.Since the M&A occurred in over hundred years ago till it comes to active today, there is always a question puzzling economists. It is whether M&A create value for enterprises. Throughout the researching of firm performance, influences coming from M&A are focused on. To answer this question, domestic and international economists did a large number of studies from every angle. But the conclusions have considerable differences and can not reach a consensus. With the development of securities companies’ M&A business and its increasing participation in enterprises’M&A activities, a new question that whether securities companies’M&A business can create value in enterprises’ M&A activities appeared in front of economists. They wonder how securities companies’M&A business affect firm performance in M&A. This study intends to provide an angle of research and a conclusion worth reference for answering this question.Start from review of relevant theory and research findings, this thesis summarizes domestic and international research methods and conclusions about firm performance in M&A activities. On this basis, we give a hypothesis as the change of firm performance will be better when securities companies participate in enterprises’M&A activities. To test this hypothesis, we collected the data of listed companies which had M&A activities in2011.According these data, we used event study methodology to make an empirical test on the hypothesis and reached a conclusion that participation of securities companies didn’t improve acquired companies’M&A performance and only slightly improve acquiring companies’ M&A performance. We analyse the conclusion and summarize the limitations in this empirical test. Then after considering the status quo of securities companies’ participation in M&A in China, we give four advices as follow. Firstly,acquiring firms should employ securities companies involved in M&A more actively. Secondly, merged enterprises should keep prudent when decide whether to employ securities companies involved in M&A. Thirdly, securities companies need to improve the quality of their service. Finally, government should provide a better market environment for M&A.This thesis include four chapters:the first chapter is introduction, the second chapter is literature review, the third chapter is the empirical test on the influence of securities companies on M&A performance, the fourth chapter is giving advices to acquiring firms, merged enterprises, securities companies and government.