Research On Financing Preference Of In M&A Financing Of Domestic A-Share Listed Companies

In recent years,China's rapid economic development has brought many opportunities to enterprises,but also brought a lot of challenges.In order to win more benefits in the competitive market,enterprises have begun to expand their production and operation scale.Among them,merger and acquisition activity is an important way for enterprises to realize diversified operation,expand production scale and improve their core competitiveness.Mergers and acquisitions of listed companies have gradually become the subject of activities in China's capital market.Generally speaking,M&A is a complex economic activity with high financing risks due to the huge amount of money involved.M&A financing can directly affect the success or failure of M&A transactions.Therefore,it is particularly important for enterprises to choose the right financing method for M&A.At present,the research on M&A financing in China is mostly to explore the impact of M&A financing or payment on enterprise performance,or to explore the financing channels of Chinese enterprises and put forward policy Suggestions.There are few researches on the financing of mergers and acquisitions,and even fewer studies on the financing sequence of mergers and acquisitions.Most of the theoretical researches on M&A financing are derived from traditional financing theories,including MM theory,balance theory,agency cost theory,financing superiority theory,control right theory and so on.It is generally believed in the west that corporate financing behavior follows the financing order theory.However,Chinese scholars generally believe that the financing order of China's listed companies is different from the financing order theory,which is manifested in the preference of equity financing.But for the specific M&A financing,scholars have not formed a unified understanding.Enterprises have to consider many issues when carrying out mergers and acquisitions.The choice of financing methods is not only limited by financing channels,but also closely related to the financial status of enterprises.With the improvement of China's economic system in recent years,what financing preference does China's M&A financing approach show ? State-owned enterprises are more likely to get national policy support due to their state-owned nature.Since the financing environment of state-owned enterprises and private enterprises is different,what are the differences between the two types of enterprises in the financingmethods of mergers and acquisitions ? What are the influences of the enterprise's profitability,growth and development ability and scale on the choice of financing methods for M&A ? These are the questions that this article tries to answer.The research of this paper is mainly to discuss the influence of the enterprise's own governance structure and internal characteristic factors on the financing mode selection of listed companies' M&A.This paper mainly studies the sequence of financing for mergers and acquisitions.In this paper,the financing methods of M&A are limited to endogenous financing,equity financing and debt financing.The research samples are selected from some a-share listed companies in China that have successfully implemented M&A from 2014 to 2018.From the perspective of corporate governance structure and internal characteristics,this paper selects seven factors such as corporate ownership nature,ownership concentration degree,enterprise scale and profitability to construct a mixed Logistics model,and studies its influence on the choice of financing methods for enterprise mergers and acquisitions.Although state-owned listed companies have certain bank credit advantages over private companies,the regression results of this paper show that state-owned listed companies prefer equity financing,which may be related to the fact that state-owned listed companies do not have to worry about the dilution of control rights.The study also verified that the size,cash holding level,profitability and growth capacity of enterprises significantly affect the choice of financing methods for mergers and acquisitions.Compared with equity financing,companies with larger scale or higher profitability tend to use their own funds.Compared with equity financing,companies with a higher growth level tend to use debt financing.Companies with sufficient cash holdings use internal funds firstly,debt financing secondly and equity financing thirdly.This also shows that the financing order theory has a certain degree of explanatory power to the financing mode selection of listed companies in China.This is different from the "equity financing preference" hypothesis popular in domestic literature for more than a decade,but consistent with the practice of mature international markets.This conclusion can reflect the maturity of China's capital market to some extent.