Empirical Research Of M&A Performance Affected By Payment Methods

Whether M&A success or not will have a lasting impact on enterprises. In the merger and acquisition process, a reasonable choice of payment method is very important for the successful implementation of M&A activities.This paper combines the theoretical analysis method and empirical analysis method together to study about the relationship between payment methods and M&A performance.In the theoretical analysis, this paper started explaining the concept of M&A and the method to measure M&A performance, and analyzing the types of M&A and payment methods of listed corporations, then analyzed the advantages and disadvantages of various payment methods in China given foreign M&A experiences. At the same time, in reviewing the relevant literature on the different M&A modes affected by payment methods, this paper used the signal transmission theory, capital structure theory, corporate control theory and the risk sharing theory to explain the mechanism of how payment methods affect M&A performance and built the theoretical foundation for the subsequent empirical analysis.In the empirical analysis, this paper used event study method (cumulative abnormal return, CAR) to study the relationship of different payment methods and M&A performance. First of all, through the calculation analysis and t test of the overall M&A performance sample, the paper verified the Chinese stock market can make rapid response to M&A events; Secondly, samples were selected by excluding the interrelated effects and the factors such as industry, trading and so on. Then the paper calculated the abnormal return of every payment method separately and performed t test to validate the hypotheses.The final results are as following:1)The Chinese stock market can make rapid response to M&A events;(2) It’s better to choose cash payment method when deal with the short-term performance of M&A;(3) Stock payment method led to poor short-term performance after M&A. The signal transferred to investors was the company stocks performance had been over valued, which led to significant negative excess returns;(4) Debts and mixed payment method did not change significant in the short term M&A performance;(5) Assets payment method led to poor short-term M&A performance.