An Empirical Study On Perpormance Of Diversification M&A Of China's Listed Companies

In recent years,the growth rate of China's economic has slowed down,industrial transformation has been taking place,many listed companies,facing with problem of traditional industries declining,attend to operate new business in emerging sectors of strategic importance via diversification M&A.But the market and operation of traditional industries and emerging industries are quite different.From a long-term point of view,the issues of whether diversification M&A can bring profit to the company,and create positive value to shareholders,are worth studying.This dissertation selects diversification M&As which are first announced in 2013 and 2014,then builds the model of BHAR to calculate the long run abnormal return after the announcement.The empirical result shows that the stockholders of acquiring firms suffer a statistically significant loss of about 29.4% to 34.5% over 30 months,and losses in business-unrelated acquisitions are significant higher than business-related acquisitions.Furthermore,we adopt some factors as control variables and build the regression model,it comes to the conclusion that business relevance and the performance of diversification M&A shows a significant negative correlation.In conclusion,companies should be prudent when conduct diversification M&A,and select those business-related companies as their acquisition target.