The Analysis Of The Stock-for-stock Merges Effect

Along with the surging of various countries’ merger and acquisition, the stock-for-stock merge become the major way for the listed companies to develop the industrial domain and the service expansion. By now there are only a few cases of stock-for-stock merger in China, though they are the mainstream in the western M & A market. Therefore, the most of domestic research findings establish on the basis of overseas study. The problems that how to determine the exchange ratio and price and how to choose the appropriate accounting method are the focus of the research. However, research in this area, the combined financial effect of convertible for listed companies, is almost empty. The combined financial effect of the convertible is reflected in what areas. The change of the exchange ratio and the Selection of accounting method will produce what kind of impact to the financial position of the enterprise. These issues are important issues concerned by the industry and also worth discussing.This thesis will, on the basis of previous studies, systematically elaborate theories and analyze cases on the financial impact of stock-for-stock merge. Firstly, it will give an overview of the concepts and theories related to the business combination and stock-for-stock merge. Then it will followed by statistical analysis on the status quo of stock-for-stock merge among China’s listed companies. Finally, the analysis will focus on the influence that stock-for-stock merge make on enterprise capital structure, profitability, cash flow and share price with reference to the typical cases of stock-for-stock merge among listed companies. The focal point would be the financial impact that the variation of the exchange ratio and option of the accounting methods bring to the surviving enterprise.The general conclusion of the study goes as follows. There’s no certain standard to determine the exchange ratio of stock-for-stock merge among China’s listed companies. The majorities of the listed companies settle it in reference to the share price and take the company’s management, the development prospects and some other factors into consideration as well. In respect of accounting treatment, the stock-for-stock merge presents as a binary pattern with equity method and binding method coexisting. Most companies adopt pooling of interest method, while a handful of companies resort to purchase method. Both exchange ratio and accounting treatment will have a significant financial impact on the merged company. The pooling of interest method should be superior to the purchase method in terms of financial impact.