The Driving Factors And The Effects Of These Factors On The Performance Behind The M&AS By The Listed Companies On The Gem

This paper aims to explore the driving factors and the effects of these factors on the performance behind the M&As by the listed companies on the GEM. Since October2009, the GEM has been more than four years. There is a large amount of attention, controversy and criticism centre on the GEM. The most pressing question is " three high indexes "(high offering price, high super-raised funds, high PE ratio)and decline of growth. Although the public consider these problems are not conductive to the development of the GEM, they lack the rigorous empirical study to show that the problems do affect the strategic decision made by the companies on the GEM. But we found an abnormal phenomenon on the GEM provides an opportunity to study this problem. The listed companies on the GEM seems to particularly keen on merger and acquisitions. Their M&A frequency is much higher than those of the listed companies on Shanghai and Shenzhen Stock Exchange Markets. These companies are positioned as high-growth enterprises and should depends more upon organic growth according to the general law of firm growth.This paper argues that the frequent M&As of the listed company on the GEM is closely related to the "three high indexes "and sustainable growth. We has carried on the theoretical analysis and put forward the research hypothesis aiming to explore the driving factors behind the these M&AS. We also do the empirical research on the short-term M&As performance to analyze the effects of drivers on the performance behind the M&As by the listed companies on the GEM and provide guidance for the development of the listed companies on the GEM.This paper focus on the frequent M&As on the GEM. We want to research the the driving factors and the performance behind the M&As by the listed companies on the GEM through reviewing and summarizing domestic and foreign research on the motivation and performance on the M&As.In chapter1, we mainly introduce the background of this paper’s topic, research significance and research approach and put forward the problem to research.In chapter2,we introduce the research conclusion on the driving factors and performance about the merger and acquisition and make a literature review to lay the theoretical basis for the paper.In chapter 3,we mainly try to explore the driving factors of the merger and acquisition starting from the phenomena of the frequent M&As on the GEM. We also do the theoretical analysis and put forward the research hypothesis and finally verify the rationality of the assumptions through the empirical research.In chapter4, we extend the above research on the driving factors. On the basis of the theory and hypothesis, we analyze the overall performance of the M&As on the GEM through the event study and explore the effects of drivers on the performance behind the M&As by the listed companies on the GEM.In chapter5, we summarize the paper’s research and give recommendations in combination with the specific. We also put forward the shortage of this paper and the possible improvements for further research.In this paper, the following main conclusions can be obtained:1.The growth pressure which the listed companies on the GEM perceived would drive them to make M&A decisions. The company prefer to M&A in the case of the pace of growth before M&A is slower and at this moment the M&A performance is poorer.2.The high rate of super-raised funds of the listed companies on the GEM will lead to the merger and acquisition behavior. They are more likely to take the M&A when the rate of super-raised funds is higher. And at this moment, the M&A performance is poorer. 3.The growth rate of the listed companies will adjust the positive correlation between the rate of super-raised funds ang the possibility of M&A. The possibility to take M&A will be more closely influenced by the rate of super-raised funds when enterprise’s growth rate is slower.4.The M&A taken by the listed companies on the GEM can improve their performance on the whole.5.The companies can accumulate experience from the previous M&As to promote the value creation in the subsequent M&A behavior.In addition, the management’s stock ownership didn’t show a significant moderating effect in our study both on the possibility to take M&A and on the M&A performance.