The Empirical Study On Diversified M&A Performance In The Chinese Listed Companies

In recent years, the diversified M&A events of listed companies in China have increased year by year, which reflected not only on the absolute number, but also on the relative proportion. From a long-term point of view, whether diversification is a very effective way of operation or not, whether diversified M&A can bring significant synergies or not, whether diversified M&A can lead to improvements in companies’ value or not, whether diversified M&A is beneficial to the company’s long-term performance or not, all of these issues are worth to study further. In this paper, we regard the year of 2012’s M&A events which happened in Chinese listed companies as the research objects. We selected 210 listed company samples and used the 2012-2015 financial data for analysis. We took the method of factor analysis and built a comprehensive financial rating equation from the five aspects of profitability, earnings quality, debt paying ability, operation ability, growth ability to analyze the sample data from 2012 to 2015. Later in this paper, we made the correlation test between the types of M&A and the comprehensive performance of listed companies, which used multiple regression model to analyze how different M&A types affect the M&A performance of the listed companies. Our correlation test established a regression model which regarded comprehensive score to each base incremental value as the dependent variable and regarded M&A type as the independent variable. Besides, we adopted the nature of the company, the first big shareholder’s stake, payment method as control variables. It came to the conclusion that diversification type variable and incremental comprehensive performance scores showed a significantly negative correlation, which means the performance level is negative after diversified M&A and the significant enhanced over time. At the end of the paper, We analyzed the reasons why the diversification M&A performance is negative from the aspects of enterprise and industry, and gives the relevant policy suggestions from three aspects of enterprises, financial institutions, and the government.