Study On Capital Allocation And M&A Performance In Industrial Revitalization

In order to deal with the effects of2008years of the global financial crisis, afterthe financial crisis China implemented the loose monetary policy. Money supply andstock rising, home appeared the phenomenon of relative surplus liquidity, corporatecash holdings increasing, mergers and acquisitions to become an important channel offree cash flow. In the meantime, with the constant deepening of China’sindustrialization process, traditional manufacturing industries have exposed manyproblems. In early2009the State Council promulgated the industrial restructuring andrevitalization plan of ten key industries, designed to improve industrial concentration,changes in mode development of traditional industries. Mergers and acquisitions is animportant means of the Revitalization and restructuring of industries, and is alsoimportant way of Optimal allocation of resources. In the context of industrialrevitalization, Study the problem of Propensity to invest of the different nature ofcorporate, fixed investments (capacity expansion) and intangible investment(technological upgrading) which is more important. Meanwhile, research Degree ofdifference of Capacity expansion and technology upgrading acquisition targets ofcapacity caused by Different acquisition targets. On this basis, further research andanalysis of different investment options in M&A impact on business performance.The a series of studies has important practical significance.In the paper, capital allocation will be defined as intangible capital investmentand fixed asset investment both. Through fixed investments and intangible investmentreview of the literature, and Analysis of the M&A performance theory, establishappropriate performance model, raised the hypothesis. This study sample is358manufacturing enterprises which Mergers and acquisitions occurred in China2007-2009Shanghai and Shenzhen A-share market, and according to Whether it isthe revitalization of production capacity to sub sample, Processing financial data ofthis358corporate for2006-2010with excel with EXCEL2003.Finally, regressionanalysis of the data with SSPS17.0and concluded. Through this study found:1. In thechoice of M&A investment direction, State-owned and non state-owned enterprisesboth tend to increase the scale of investment in intangible assets, and State-ownedenterprises more apparent. In the expansion of investment in fixed assets,non-state-owned enterprises more active than the state-owned enterprises;2. The scaleof investment in fixed assets and M&A performance was significantly positively correlated, the scale of investment in intangible assets and M&A performance wasno significant relationship. This shows that the company production capacity candirectly improve business performance, but technological innovation and Brand valueadded is not in the short term to bring about significant improvements in corporateperformance. Business investment is not necessarily fully rational.;3.When theacquisition target to revitalize the industry, can significantly improve productioncapacity, the better to improve business performance; When the acquisition target toNon-industrial revitalization, although the company’s fixed assets has also increased,but not significantly improve the enterprise’s production capacity, a limited role onbusiness performance.Finally, the combination of theoretical analysis and empirical researchfindings,the following policy recommendations are made. Private enterprises shouldbe the focus of development based on their capacity to enhance; Targeting therevitalization of industry to seize the development opportunity brought by therevitalization plan; concerned about the post-merger integration, more effectiveOptimize M&A performance; Strengthen cooperation between government andenterprises, establish the effective channels of communication and supervision;emphasize innovation, enhance independent innovation capability.