China’s Listing Corporation Mergers And Acquisitions Performance Evaluation

With the rapid development of China’s capital market, M&A has been growing drastically in our country. Although global economy is still buried in recession, M&A transaction performance occurs frequently in China, perhaps indicating that Chinese mergers and acquisitions market will hit record highs. But we cannot ignore the side effect of mergers and acquisitions.In fact, although the M&A transactions occur very frequently in the market, not all participates in the market benefit from these activities. The synergistic effects are unsatisfactory and the operating results are far away from the anticipated target. Quite a lot of companies do not obtain the expected benefits; even some suffer operational and financial difficulties due to improper merger strategy, unreasonable resource reorganization and cumbersome institution. Therefore, it is very necessary and urgent to propose a scheme to evaluate M&A performance, both from the aspects of theoretical research and practical applications.Based on the past M&A performance evaluating research, this article applies some of the latest methods, both domestically and abroad, to evaluate the performance after the merger. At the same time, this paper analyzes the factors which influence the performance of company after acquisition。Compared with many traditional evaluation methods, more and more Scholars tend to use economic added-value(EVA)to evaluate a company’s performance when it initiates an acquisition. In this article, considering the new accounting standards in China, a series of corresponding adjustments are conducted to calculate(EVA).Besides, in order to adapt to our national conditions and specificity of the project research, off-balance sheet financing are also taken into account, which affects merged company’s raising capital and its cost. There is no denying that EVA evaluation model can consider the opportunity cost of capital which can truly reflects the real interests of shareholders. Therefore, exploring an appropriate assessment system to evaluate the consolidated firm’s performance is also an important content of this study.In the empirical part, this paper discusses the consolidated performance changes when it proposes a merger. Considering the purpose of the research, variables of the model and the availability of the data, 48 listed companies are chosen from CSMAR database, which propose merger activities in 2010. In this paper, adjusted EVA is applied in the theoretical model, which acts as a tool to measure performance changes when the acquiring company acquires the target. Through analyzing the performance changing trends of the 48 sample enterprises among 2009, 2010, 2011, 2012 and 2013, we can judge whether M&A could improve the performance of listed companies in China.In the end, conclusions are drawn that mergers involved related party transactions underperform others which are otherwise not. Meanwhile, industry mergers could improve performance of the consolidated firm and state-owned mergers would never promote or cause loss to the conglomerate。...