Reaction And Influence Factors Research To Merger And Acquisition Of Listed Company

Generally, companies conduct business investment behavior through two main investment.The one is that companies invest in the various factors of production, through the integration of various production factors to increase production capacity and expand the scale of operation; The other one is that companies use merger and acquisition to acquire some or all of the shares of other companies, which will be directly included in the operation and management of its business scope. The first way is that the resources grow in a single company. The use of the resources and the growth of capital are limited by the company's own conditions. But in the way of the merger and acquisition, which the capital is allocated in the whole community.The company can match the capital position with the whole community resources and achieve the utilization and integration of capital in a wider range. Its growth is not affected by the absolute growth of social wealth.The merger and acquisition is the product of social development. Nobel Laureate Stigler Zeng said:"In the United States today, there is not a large company by a certain degree, not grew up in some way by mergers, which is the prominent phenomenon in the history of modern economy. With the advancement of China's economic transformation, more and more companies realize the upgrading of the product structure and solve the problem of excess production capacity by the way of mergers and acquisitions. At the same time, the merger and acquisition is an important mean of strategic reorganization of state-owned enterprises. Through the merger and acquisition, the state-owned enterprises can inject the new blood, reduce transaction costs, invigorate the working atmosphere, and reduce rent-seeking behavior to a certain extent to improve the operating efficiency and avoid the loss of state-owned capital. From the event of China's M & A through the year of 2012 to the year of 2015, in recent years, the mergers and acquisitions grow rapidly. According to the data of CVsource terminal hit, the case of M & A reached 4891 in 2012, the transaction of which amounted to 30.253 billion. The case of M & A reached 9700 in 2015, the transaction of which realized 70.943 billion. The M & A doubled through four years, indicating that M & A has become the important mean of China's enterprises to achieve economic transformation and resource optimization. There are many literatures about the performance of the M&A in the domestic and foreign, but there remains controversial in whether M & A produces a positive market effect, what factors affect the M & A's market response.In order to provide realistic reference to the firms, the paper want to use the existing academic knowledge to research the market reaction and the factors of M & A.The core of this paper is to research the market reaction of the acquiring company, mainly through the following steps:In the first part, this article discusses the background and significance of the subject. As the China's economic restructuring and the reform of state enterprises promoting, coupled with the enactment changes of the stock market in 2015 and the national policy supporting, more and more enterprises achieve resource integration and industrial upgrading by the way of merger and acquisition. But whether is a positive market effect for the acquiring company? how the different mergers and acquisitions impact the stock price? Based on this, the paper presents a core of study, and then discusses the methods and models of the paper-event study, market model method, multiple regression model. On the basis of previous studies, this paper discusses the characteristics of the study.In the second part, the paper introduces the basis theory of M&A, including the definition, the classification, the process. From the New Neoclassical Synthesis theory, efficiency theory, principal-agent theory, new institutional economics perspective of four economic theories, the paper discusses the merger motivation theory, The neoclassical synthesis theory is proposed of the scale theory, market power hypothesis and the theory of tax savings, which consider the acquisitions can achieve expanding economies of scale, increasing market shares and saving tax. The efficiency theory is that the M&A can improve the efficiency of some companies, the representative hypothesis of which is the hypothesis synergies, diversification theory, undervalued theory and so on. Principal-agent theory suggests that the M&A can reduce the agency costs, the representative hypothesis of which are the managers' doctrine hypothesis of Mueller (1969) and the free cash flow hypothesis of Fama& Jensen (1983). New Institutional Economics theory of M & A, mainly based on research the motivation of M&A in the presence of transaction costs, the main representatives of which is the transaction cost theory of Coase (1937). Be based on these theories of acquisitions theory, the paper understand the operating mechanism of mergers and acquisitions, all of which lay a theoretical foundation for later empirical.In the third part, the paper reviews the current research of the domestic and foreign. There are two main ways to study the performance of M & A, one is using the event study to research the short-term market reaction of M&A. The other one is using the financial indicators to study the long-term performance of M&A. This article discusses the performance of merger with both methods. Whether using the event Study or finance index method, it remains a debate about the acquiring company's market performance of M&A. Under different scholars, the same factor of M & A Performance will come to the different result, which mainly because of the different samples, data filtering, the window period, related concepts.This is useful for the later empirical section.In the fourth part, the paper use the event study to research the performance problem of M&A, using the excess return to measure the market response. The paper selects the M&A events of A-share listed company from year 2012 to year 2015 as sample, and set up (-15,15) as the window period and (-160,-16) as the estimation period because of the properties of event study and vulnerable efficient of capital markets.Firstly, the paper calculates the average excess returns and cumulative abnormal returns of the total sample, finding that the M & A activity produces a positive market reaction in the three days before the announcement, and reaches a maximum 13 days after the announcement, indicating that the market is optimistic about the announcement of the merger, and explain the existence of inside information disclosing as well as the long time for China's capital market to absorb the M&A.Secondly, according to the method of payment, the nature of equity, company size, the proportion of large shareholders, the presence of related transactions, the paper divides the total sample. The paper finds that the market is relatively optimistic about the mixed payment, the private enterprises, the large firms, the related transactions, of which the payment and company sizes are more significant factor. On the basis of predecessors, the paper introduces the life-cycle theory of enterprise, find that the mergers and acquisitions of maturity corporate and growth corporates produce a significantly positive market reaction and that the effect of mature companies is greater than the growth companies.Thirdly, based on the theory of investor expectations, the paper introduces the financial indicators to make the multiple regression with the front factor, and finds that the profitability and asset-liability is a significant negative correlation with the market reaction of M&A, and that the current ratio, net profit growth and the total asset turnover have no significant relationship with the market reaction of M&A. These show that the company's fundamentals make little affect to the short-term performance of M&A. Control variables,such as related party transactions, major asset restructuring identification, payment method, coefficient shareholders, which have significantly positive with the market reaction. Some other variables, such as the equity nature, maturity and growth factor, which have significantly negative with the market reaction, but the size has no significant relationship with the market reaction. Most of the conclusions are consistent with the results of single factor. In the single factor, the largest shareholder is not significant, yet the size group is significant. But after adding other variables, the result of the largest shareholder staking is very significant, yet the result of company size is not significant.In the fifth part, this paper reviews the conclusions of demonstration and makes an explanation about relevant empirical results. According to the process of thinking and the studies of the previous scholars, the paper presents the insufficient and prospect of this study. The largest insufficient of this paper is that it does not distinguish between the different funding in studying the market performance. In practice, many companies will be private placement financing in the acquisition of companies. Different subscribe parties may cause the different market reactions, such as the proportion of its large shareholders and executives subscribe. I hope to improve this part in the future study.Since 2016, many scholars predict that the year of 2016 will be the termination of the merger. A lot of enterprises which issued the bulletin of M & A terminated the contract, which is largely because these companies believe that the M & A does not bring the good integration of resources and the improvement of shareholders' equity to them. This paper uses the event study to research the market reaction of M&A for nearly four years, and gives the average excess return and the cumulative abnormal return of the different group. Then the paper combines the different factors with the financial indicators to make a multiple regression with the cumulative abnormal return. The paper finds some unique conclusions and provides a realistic reference to the companies and investors.