An Empirical Study Of The Different Asset Restructuring Modes On Companies’Short-term And Long-term Performance

Along with the prosperity of the securities market, more and more mergers and acquisitions between listed companies are taking place in China, while the effect of the reorganizations are also different. Nowadays there is a dispute on the empirical results of the performance of mergers and acquisitions. In2007, the new accounting standards was issued in China, which means it would impact the processing and measuring of assets restructuring significantly. Thus based on the previous studies, we choose the listed companies which had major asset restructuring in2007as samples, finding the financial data before and after the restructuring, using the method of principal component analysis and one-way ANOVA, to study the impact from different kind of restructuring on companies’short-term and long-term finance performance.Firstly we define the concept of assets restructuring and reorganization, and classify the restructuring methods as asset acquisition, equity transfer, divestitures, debt restructuring and asset replacement. Each of these methods has its own characteristics and scope, thus the effect and the impact of restructuring are also different.Then we select the listed companies which had a major asset restructuring in2007as samples. Collecting the financial data of these companies from2006to2011, we choose10main financial indicators as the measuring factors of financial performance, such as net return on equity (ROE), earnings per share (EPS), etc. Using the principal component analysis in SPSS, we turn the10indicators into a comprehensive scoring system, and score the performance of every company in each year.We use the score of2007minus the score of2006as the change of companies’ short-term performance, and using one-way ANOVA to study if there are significant difference in different restructuring mode. Using the same way, we can also study the change of long-term performance by analyzing the difference between the score of2011and the score of2006.From the empirical research, we can draw the following conclusions:Generally speaking, daring the year of restructuring, the average performance of the sample companies declined, but it increased since the second year, and exceeded the average corporate performance before the restructuring followed by a steady upward trend, which suggests that the restructuring of assets have a positive impact on firm development; using asset replacement, companies’ performance can be enhanced in short-term, but the improvement is not persistent; using asset acquisition, companies’ performance is in decline with a continuing downward trend, thus the acquisition of assets has a negative impact on short-term and long-term performance; using the divestitures, companies performance is enhanced in both short-term and long-term period; using ownership transfer, companies’ performance has a significant growth trend, with which we can consider the equity transfer is good for long-term growth; using debt-restructuring, companies’ performance is enhanced in the first year, but then it declined year by year, and the overall market performance was still poor, thus long-term performance improvement is very limited by using this method.