Impacts Of Mergers And Acquisitions On Performances Of Media Industry

Zhejiang Digital Culture,a listed company transformed from traditional newspaper industry to digital entertainment industry through M&As is taken as a research object to analyze the company's short and long term performances of M&As.For short term performances,they are quantified by the stock's abnormal returns via event study.It is found that the performances are mostly negative.Moreover,there are certain advanced reaction phenomena in the capital market.In addition,the correlation analysis indicates that goodwill has significant negative influences on abnormal returns.For long term performances,they are quantified by the production efficiency and its change rate via DEA-BCC model and DEA-Malmquist index model of data envelope analysis(DEA)and factor analysis.The conclusions are showed below.firstly,M&As have negative influences both on PTE and Techch one year after announcement,and the effects have disappeared since two years after announcement.Secondly,M&As have negative influences on technical level.For reasons,it is found that the causes are high goodwill and declining main profit via model results,correlation analysis and accounting index research analysis.While high goodwill stems from M&As,low main profit comes from the company's divestiture of traditional newspapers with slow development of the digital entertainment industry.Hence,the suggestions are given as below.In terms of main profit,the company can accelerate the development of games and new media businesses,such as increasing the research and development of mobile games and game derivatives,developing media platforms and video log business,etc.thereby increasing revenue from games,advertising and value-added services.In terms of goodwill,it can start from reducing buyers' merger costs,increasing the fair value of the identifiable net assets of the targets,to reduce the goodwill and goodwill impairment risk brought by M&As.Merger costs can be reduced by reducing the price of M&As,converting some forms of transaction consideration,multiple mergers and acquisitions,and non-temporary same-control mergers and acquisitions.The latter two have the risk of reducing net assets.The fair value of identifiable net assets can be increased by adjusting assets,liabilities,or contingent liabilities of targets via buyers' controlling shareholders.