Performance Of Capital Merged Listed Company Behavior Characteristics

Since the mid-1990s, foreign capital began to enter the Chinese market graduallyby means of mergers and acquisitions. Under the background of attending WTO andthe development of economic globalization, China is gradually improving the foreigninvestment environment, building good platform for the development of foreignmergers and acquisitions, expanding the scale of foreign mergers and acquisitions.From the microscopic point of view, foreign mergers and acquisitions bring sufficientcapital to domestic companies, advanced production technology and managementexperience. From a macroeconomic perspective, foreign mergers and acquisitionsmay promote the adjustment of industrial structure and economic growth, but foreignM&A process may also cause industrial monopolies exist which endanger oureconomic security. Foreign M&A is a double-edged sword, Chinese enterprisesshould adhere to the principles of rationality, and make reasonable and effectivemergers and acquisitions decisions. Therefore, studying foreign mergers andacquisitions of listed companies in China is very meaningful.Firstly, the paper studies the theory of foreign mergers and acquisitions,elaborates the motivations of foreign mergers and acquisitions are from the synergiesof the theory, the principal-agent theory, the theory of market power, and the theory ofvalue underestimation, and raises the behavioral characteristics of the four aspectsaffecting the performance of foreign mergers and acquisitions. Secondly, the paperselects a sample the1995-2008from foreign mergers and acquisitions of listedcompanies, and uses the event-studying, the factor molecules law and Mean Testingstatistical methods. The results show that the capital market strongly reacts to foreignM&A events, the merged companies increase shareholder wealth in the short run; thefinancial performance of the target companies after the merger presents an up anddown profile, and,in average, the first year’s performance of the merged companiesincreases significantly, the second and third year’s performance declines, but stillbetter than the pre-merger performance. With the sample-classified tests by differentbehavioral characteristics, the paper finds that the short-term and long-termperformance is significantly better with industry-irrelevant mergers and acquisitions,direct M&A, and merging companies listed in Hong Kong other than otherwise except. Finally, recommendations are made from both the micro and macroperspective, The government should strengthen market supervision, create fair andcompetitive environment and continue to consummate the policies and regulation offoreign mergers and acquisitions, and correctly guide foreign investment. Meanwhile,the target companies should make full use of the advantages of acquisitions toimprove their core competitiveness, understand M&A motivations, strengthen theintegration of foreign mergers and acquisitions, to achieve the optimal allocation ofresources. Suggestion are also made for the regulatory authorities to make M&Apolicies and strategies in the future, for companies to make mergers and acquisitionsinvestment decisions, and for investors to make personal investment decisions.