Research On The Operating Performance Of Overseas Horizontal M&A For Chinese Enterprises

With the advent of economic globalization, international capital flows are becomingincreasingly active, and so many enterprises expand overseas market actively. From theinternational experience, M&A is a fast and effective path to expand enterprise scale andenhance the overall strength. Under the rapid development of global economy, overseasM&A has become a hot topic during enterprises’ cross-regional expansion. With thistrend and the government’s incentives, a large number of Chinese enterprises start to goabroad complying with this tide. Chinese enterprises overseas M&A occurred frequentlywith unstoppable trend not only in numbers but the transaction scale in recent years,especially the horizontal merger which has become the first choice in this wave. However,opportunities and risks always coexist. Some companies increased corporate performancethrough overseas M&A, some do not. Therefore, whether Chinese enterprises can realizethe effects of horizontal mergers in overseas market or not is worth to research. Andthat’s the main problem the article tries to solve.The paper aims in making a empirical test of the overseas horizontal M&Aperformance, which selects30Chinese listed companies as research samples. First of all,the paper give the explanations of acquisition-related concepts, intrinsic motivations ofhorizontal acquisitions and research methods on M&A performance. Then, based onusing accounting research method, the article selects financial index that reflect theenterprise’s profit ability, operation ability, growth ability, debt paying ability and otherability to establish a corporate performance evaluation model by factor analysis. It aimsin testing the operating performance from the year before merger occurs to the secondyear after the merger. On the foundation of that, it compares the performance under fourfeatures of merger in order to analyze deeply.This paper includes five parts in total:The first chapter introduces the basic theory of horizontal mergers and acquisitions,the second describes the status and features of Chinese horizontal M&A, the third chapteranalyses the four year performance of these30Chinese overseas horizontal mergers and acquisitions in using factor analysis in order to see the trend clearly. Based on that results,it gives the reasonable explanations; the forth one is to compare these companies’ M&Aperformance in features, and the last chapter summarizes the conclusions of empiricalresearch and gives related recommendations.These are the conclusions: Overall, the horizontal M&A performance of these30listed companies increase in the short term which is lack of long-term rise. Analyzing thereasons, on the one hand, it dues to the less overseas M&A experience of Chineseenterprises and poor integrated coordination ability; On the other hand, some enterprisesjust go for the short-term interests of M&A instead of strategic considerations which leadto hardly maintain the expected long-term effects. From the point of four differentcharacteristics of mergers and acquisitions, the non-manufacturing industry has betterM&A performance than the manufacturing industry; The situation of performance thattarget company locates in Asia, Africa and Oceania is better than that the target companylocates in Europe and North America; Nationalized enterprises’ performance is betterthan the non-nationalized enterprises; And cash payment has more advantageous thanstock payment in improving the result of horizontal mergers and acquisitions.