Research On The Impact Of M&A Premium On Performance Of Chinese Public Companies

The merger and acquisitions(M&A)of A-share Listed Companies in China have been very active in the past five years,with the volume and price rising on the transaction scale.Although many enterprises expect to improve their business performance and enterprise value through M&A,it is still an investment decision in essence.The premium paid by the acquiring enterprise is an investment,and the gain of M&A is income.From this perspective,whether the merger and acquisition benefits the enterprise lies in the comparison between the cost and the income of the M&A.However,under the circumstance of the increasing M&A popularity of listed companies,the high premium of M&A has gradually become the new normal of mergers and acquisitions of listed companies,but can the assets paid for by the highpremium acquisition really bring higher value to the listed companies? In this regard,the article hopes to explore the theoretical causes of M&A premium and the reaction of M&A gain to the premium of M&A,so as to show the recognition degree of market investors on the M&A price,and provide a reference for companies intend to carry out the acquisition to determine the ultimate acquisition cost.Since theoretically,M&A premium is mainly affected by synergies and information asymmetry,this paper mainly analyzes premium differences and performance responses of different M&A types and entities,of which M&A types are divided into conglomerate combinations,related combinations including horizontal and vertical combinations,and two sides of M&A will be divided into state-owned enterprises and private enterprises by the subjects in merger practice.This paper firstly analyzes the domestic and foreign research results on merger premium and performance,showing the main factors that affect M&A premium and performance.Secondly,it combines the synergistic gain theory,information asymmetry theory and game theory to analyze the impact of M&A type and subject on premium and performance separately,and also researches the performance response of M&A premium,and the author puts forward corresponding research hypotheses based on the theoretical analysis.Then the paper takes the M&A of China A-share listed companies that are acted as the acquirers from 2015 to 2016 as the research object.Firstly,through the multiple regression analysis of the premiums on M&A types,entities and their interaction terms,this study examines the differences in premium between different types of M&A and entities.Then,it researches the impact of M&A premium on the M&A performance of listed companies on the short-term market through event-study methodology and multiple regression.In the study,the following conclusions are drawn:(1)Enterprises are more inclined to conduct M&A with companies of the same nature,and the acquisitions among private enterprises pay a higher premium than those of state-owned enterprises.One reason might be that the allocation of resources for private enterprises is more free,and the synergies are more easily achieved,another reason is that the management of private enterprises may be more active and powerful in the game of the M&A premium.(2)The premium level of conglomerate combination is significantly higher than that of the related combination,which is likely to be the defeat of the game caused by more serious asymmetric information,and it also might be that the synergies estimation for conglomerate combination is harder,thus acquirer has over-optimistic expectations.(3)M&A premium has no significant impact on short-term M&A performance,but the M&A short-term market performance of related combination was significantly positive.