Types Of Mergers And Acquisitions And Enterprise Performance

With the continuous improvement of China’s economic development level,China’s economic development has gradually evolved from the past incremental economy era to the stock economy era.Thanks to the reform and opening up and the vitality of China’s local market,Chinese enterprises have gradually accumulated and grown in the past decades.Under the dual background that China’s macro-economic development characteristics have changed from high-speed growth to high-quality development,and Chinese enterprises are facing increasingly fierce competition environment and urgently seeking new development sources after decades of development,the number of M&A events is increasing,and the total amount of M&A transactions in China exceeded 1 trillion yuan in 2014,which shows that Chinese enterprises favor M&A strategies in their further development.Throughout the history of M&A events,the waves of M&A in western developed countries in the last century have made western enterprises gain great advantages.At present,Fortune 500 companies have adopted M&A strategies in their further development,such as obtaining a larger market scale and rapid expansion.This shows that M&A does play a certain supporting role in the development of enterprises.It is of practical significance to explore the impact of M&A events of local enterprises in China in the past few years on their development.Based on the degree of business differences of the participants in M&A events,there are horizontal M&A,vertical M&A and mixed M&A types.This paper selects more than 200 M&A events of listed companies in Shanghai and Shenzhen in 2013-2015 from Wind database,and discusses the relationship between M&A types and enterprise performance.Firstly,using the event study method,this paper analyzes the fluctuation of the stock price caused by the announcement of M&A events,thus affecting the market value of enterprises and the differences between different M&A types;Secondly,according to the financial report data of five years before and after M&A combined with principal component analysis,the long-term performance of enterprises after M&A is analyzed,and the differences among different M&A types are compared.Finally,this paper establishes a multiple regression model to analyze the relationship between M&A types and long-term performance of enterprises,and the factors that different M&A types affect enterprise performance.The empirical results show that M&A events bring extraordinary returns to shareholders based on the fluctuation of stock prices in a short period of time,and the extraordinary returns obtained by mixed M&A are obviously higher than those of horizontal M&A and vertical M&A;In the long run,the performance improvement of Chinese enterprises after M&A is not very optimistic,but the long-term performance of mixed M&A is still the best among the three types of M&A.At the same time,the short-term and long-term trends of M&A performance are consistent.In addition,mixed mergers and acquisitions are mainly related to the profitability of enterprises,which brings new profit sources to enterprises.Horizontal mergers and acquisitions are mainly related to the operational capability of enterprises,which speeds up the turnover of assets,while vertical mergers and acquisitions are mainly related to the development capability of enterprises.Generally speaking,the performance of mixed M&A enterprises is the best,which indicates that at present,only expanding the scale of Chinese enterprises is not enough to improve their operating performance,but to rationally allocate limited resources and explore new development areas to obtain higher returns.