Research On Relationship Between M& And Earnings Quality Of Airlines

The growth of major global airlines is closely related to mergers and acquisitions activities.With the rise of the sixth wave of M&A in 2005,emerging market countries represented by China have gradually become major players.Whether airline M&A has brought about substantial improvement or merely a formal expansion,and the specific role between M&A transaction characteristics and earnings quality deserves further study.This article reviews the research status of M&A and earnings quality,and analyzes the mechanism of M&A and airline earnings quality.This paper constructs an airline's earnings quality evaluation index system from the five dimensions of synergy,safety,profitability,sustainability and cash availability.Based on the empirical analysis of global airline M&A from 2005 to 2016,research the characteristics of airline M&A and the role of airline earnings quality,and draw the following conclusions: Although M&A have not substantially improved airline earnings quality in the short term,through the increasingly optimized reorganization of resources and reshaping the vitality of the main business,the earnings quality will be improved.Related type of M&A can effectively enhance the core business development capabilities of airlines and greatly improve the earnings quality.Formal institutional distance is negatively correlated with earnings quality.However,with the increase of time and the adaptation of the environment,there is no significant impact on the quality of earnings.Although M&A in a negative environment can quickly improve airline earnings quality,there is no significant impact on earnings quality in the long run.It is not clear that experience,payment methods and control degree have significant impact on airline earnings quality.Thus,corresponding suggestions are as follows: airlines should comprehensively evaluate M&A,and pay attention to the cash flow revenue and expenditure and profit composition.When developing a M&A strategy,the company should choose a target company with a high matching degree of operations and environment.Make reasonable use of M&A opportunities and pay more attention to the main business.It is hoped to optimize the M&A strategy and earnings quality of airlines,and promote the sustainable development of China's civil aviation transportation industry.