The Effects Of Corporate Social Capital On M&A Performance

With the growth of China's economy and the continuous improvement of capital market,mergers and acquisitions(M&A)activities of listed companies are increasingly frequent.M&A have become a common economic phenomenon.As one of the most important ways to achieve strategic goals,whether M&A create value or not and what factors affect M&A value are the focus of attention in the practical and theoretical circles.In theory,social capital can transfer information and reduce information asymmetry in the process of M&A.Therefore,from the perspective of social capital,this paper studies the impact of the corporate social capital on the performance of M&A in the perspective of information asymmetry.Based on the theoretical research on corporate social capital,mergers and acquisitions,and information asymmetry,this paper puts forward that corporate social capital has the effect of information transfer,which can reduce the degree of information asymmetry in the process of mergers and acquisitions,and thus improve the performance of mergers and acquisitions.This paper takes the listed companies in which M&A occurred from 2008 to 2015 as the research object.Firstly,we construct the index system of enterprise social capital in the following six aspects: bank-enterprise relationship,supplier relationship,customer relationship,executive relationship,political relationship and alumni relationship.We can analyze the principle components of the six social capital indexes and get the social capital comprehensive index.Then we measure the M&A performance by the change of the total asset returns before and after the merger and acquisition,and analyze the effect of the corporate social capital on the M&A performance.The results show that the level of corporate social capital has a positive effect on M&A performance.Furthermore,to study the mechanism of the impact of the corporate social on M&A performance,we divid the M&A events into two groups according to the degree of information asymmetry in the process of M&A.The empirical results show that,compared with the M&A samples with low information asymmetry,the positive effect of social capital on M&A performance is stronger in the M&A with higher information asymmetry.It shows that the corporate social capital can effectively alleviate the degree of information asymmetry in the process of M&A,and positively promote the performance of M&A.On this basis,this paper puts forward the suggestion that enterprises should increase investment in social capital timely and appropriately,and make rational use of social capital in the process of M&A,making full useof social capital in M&A activities.