Corporate Life Cycle,Resource And Diversified M&A

Diversification strategy plays a more and more important role in the developed countries..With the gradual progress of China’s reform and opening up, as well as the deepening of the integration of world economy, Chinese enterprises begin to come out diversification strategy under the influence of diversification strategy in developed countries, as well as government promotion.For the choice of the ways of mergers and acquisitions, in recent years, many people hold the view that diversified mergers and acquisitions is at a discount, at the same time a large number of listed enterprises abroad return to specialized operation, but the number of listed companies which choose diversified M&A is still rising year by year. So, what is the motivation for enterprises to carry out diversified strategy? What factors influence the value of diversified mergers and acquisitions?Companies choose diversification strategy, which aim at opening up more and dominate the market, and to avoid the risk of a single operating. Enterprises can go to buy their own equipment, train new staffs, build brand and make market development, etc. However, this approach will not only spend a lot of money, time and effort. More important, in the face of an unknown, new industries and new market, there exists unknown business operational risks and market risks. Because of this, mergers and acquisitions becomes the main form of corporate diversification strategy. Through mergers and acquisitions, companies can obtain the target company in a short time and acquire the resources directly, such as direct access to its brand, customers, channels and product resources. Which makes enterprise in the target industries can quickly enhance their competitive advantage.Study at home and abroad for diversified enterprise value who takes M&A strategy is controversial. Many studies suggest that diversification is weaker than the non-diversified corporate value. However, does it cause the discount by diversification itself under the "diversification discount" concept? Or the company does not understand and realize its life cycle and the resources? Currently, the literature which is from corporate life cycle and enterprise resource perspective to discuss diversified M&A is rare. Therefore, to discuss this issue has the theoretical value and practical value.Firstly, the article began to analyse relations between the value of M&A and corporate literature, retrospect the reviews and related articles in the field. Then it puts forward the theoretical analysis and hypotheses, and based on it we began model design and sample selection. In the empirical part, it concludes median difference test between the two types of sample, correlation test and regression analysis. This regression analysis model use Logistic regression as the model, the variables choose life cycle as the explained variable, management ability and financial resources act as explanatory variables, combined with the control variables for regression analysis, and research containing the cross-variable regression analysis for life cycle and enterprise resource, which inspect companies choose which stage in their life cycle choose the diversify M&A as a way to expand, and when the company has a wealth of financial resources and excellent management capabilities, does they more like to choose diversified mergers and acquisitions or not. Besides, does the corporate resources and life cycle have the cross effect for diversified mergers and acquisitions. All of these aim at providing a new explanation for "diversification discount " concept. Finally, the article conducts robustness tests through alter proxy variables of the explanatory variables.This article selects acquisition events among2008to2011listed companies as the sample. The empirical results show that the enterprises in growth period tend to choose the none-diversified mergers and acquisitions. When Enterprise’s external financial resources is abundant, the enterprises tend to choose none-diversified M&A, while when the management ability is stronger,the effect is not obvious. At the same time, the corporate life cycle and corporate resources have an interaction effect for the diversified merger.