State Ownership And M&A Performance

M&A (Merger and Acquisition) plays an important role in enterprise resource allocation, which is employed by more and more companies. And enterprise merger has become the shortcut of capital accumulation with rapid expansion. The world economy has huge volume of merger annual. China is one of the largest emerging markets and its government still plays a decisive role in its economy. So this makes China a desirable laboratory to have a research on the influence of state ownership in performance of M&A. This paper intends to explore the relationship between state ownership and performance of M&A.This paper examines the role of state ownership in mergers and acquisitions by analyzing the short-term and long-term performance of Chinese state-owned enterprise (SOE) acquirers relative to Non-state-owned enterprises (NSOEs) peers from 2009 to 2011. And this paper is divided into seven parts.The first part is an introduction, mainly introduces the background, theoretical and practical significance of the research.The second part is the literature review, mainly about the theories of M&A, research methods and the relationship between performance of M & A and state ownership.The third part introduces the classification in terms of enterprise character, and then we discuss the risk of M & A according to the classification above.The fourth and the fifth part analysis the short-term and long-term performance of different types of mergers and acquisitions using event study method, and then we do research on the relationship between the nature of the enterprise and performance of M & A based on some control variables using the method of multiple regression analysis.The sixth part we analysis the operating performance and use this to strengthen the conclusion as the defects existing in the event study method.At last we give the conclusion and some policy recommendations.The main conclusions by empirical study of this paper are as follows:Firstly, we find that the announcements effect is positive in the short run while do not make a progress in the long term. Secondly, from the angle of buyers, the state-owned enterprises have better performance in the short-term, while they underperform the NSOEs in the long run. Thirdly, from the angle of sellers, the performance of SOEs is worse than NSOEs both in the short term and long term. We can see that state ownership does not bring long-term positive effects on M&A. At last, we find that M&A in hot political period has better performance than that in the cold political period.