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An overview of research on M & a performance

Author: MoLiJun From: www.yourpaper.net Posted: 2010-06-03 13:25:24 Read:
Keywords: the M & a performance event study method of financial index
Abstract: Study on the performance of M & A and relates to the macroscopic and microscopic lots of things and phenomena, but empirical data to prove these hypotheses, so the empirical research about enterprise merger & acquisition has become a hot research at home and abroad.In foreign countries, empirical research on this conclusion is mainly according to the two main lines: testing the recombination Sample Firms in the presence of mergers and acquisitions under reaction and check stock market mergers and acquisitions of Sample Firms operating performance (real economic benefits) effect.
, based on the stock market response to the event study method
(a) review of Foreign Studies
Foreign literature on performance of M & a long-standing, abundance.Because the capital market of developed countries is more mature, M & A has become the mainstream of research using the event method.The event study method (Event - StudyMethodology1 by Fama and Roll in 1969, is one of the most common methods of M & a performance test.This method takes the enterprise merger as a single event, determine a merger announcement date as the center of the "events", and then uses the cumulative excess earnings method to test the merger announcement effect on stock market price fluctuation."Events" length choice is very important for the application of this method.Generally speaking, the "event" period is longer, about the impact of events more comprehensive, but also more easily disturbed by not related factors.
Since then, Professor Mandyk (1974) study method with the new development of 2O century 70 time event ~IJ, through the establishment of a stock volatility model, demonstrates the "M & A is to replace the incompetent management" in view of the market.In 1985, the United States President's Council of economic advisers on the basis of the amount of such research results concluded: mergers and acquisitions to improve efficiency, improve the allocation of resources, effectively promote the company's management.Through the study of stock market based on events, for the acquisition of Target Corp shareholders have been basically formed a consensus, that income is positive and statistically significant ~ (Asquith, Brunetand Mullins, 1983; Gregory, 1997, SehipperandThompson, 1983;).Schwert (1996) cumulative average abnormal returns of 1975 to 1991 18144'M & A events after the event window of the shareholders of the Target Corp for 35%.Jensen and Rubeck (1983) pointed out that the 13 study literature research, abnormal returns to shareholders of the Target Corp successful merger will bring about 20%, and the successful purchase brings to the shareholders of the Target Corp's earnings amounted to 30%.
In contrast to this, but there is no uniform for acquiring company in the acquisition of shareholder return view (Mandelker, 1974; Langetieg, 1978; Malatesta, 1983; Eekbo, 1983), or that there is a small but statistically significant negative excess returns (Dodd, 1980), but also that there were small but significant positive excess returns (Asquith, BrunerandMullins, 1983).Jensen and Rubaek (1983) through a comprehensive study of 13 papers that on 1983 before the merger: merger performance is average income for the shareholders of the Target Corp is 50%, the average income of hostile takeover of more than 30%; the average income of acquisitions shareholders to zero, while the average income is bought the enemy can reach 4%; M & A by the two companies merged value calculation of earnings growth of 8.4%, M & A improve earnings.Bruner (2002) M & A Performance Study on 1971 2001 130 related enterprises in foreign academic circles for the latest research shows that comprehensive summary, shareholders of the Target Corp revenue is far higher than the acquiring company's shareholders benefit.Specifically, the Target Corp's shareholders generally have 10% 3O% rate of return, the acquiring company shareholders, rate of return is uncertain, and there is a negative trend, while acquiring company long-term financial performance over time showed a decreasing trend; Target Corp and acquiring company integrated shareholder benefit has the same uncertainty.Scheele (1987) of the past hundred years asked companies do a detailed study, found that mergers and acquisitions can not systematically raise the performance of the business, with "nearly 70% to no avail, or lose money", only with nearly 1 / 3 of the expected results.
Although in the empirical study, using the stock price reaction to short - and long-term) to test the M & a value creation practice has been widely used, but the disadvantage of this method can not be ignored.First of all, whether in the short-term or in long-term, the microstructure of the operation of the capital market is not completely efficient,, the stock market can not fully reflect all relevant information published by M & A.Secondly, in anticipation of the role of investors, the merger and acquisition announcements of changes in stock prices has long days in advance of reaction.In addition, the psychological expectations of investors will also affect the stock price reflects the correct value of M & A.
(two) a summary of domestic researches on
The market reaction of Chen Xinyuan and Zhang Tianyu (1999).All the companies listed in Shanghai stock exchange in 1997 they are restructuring activities as a sample, the effects of market performance test of reorganization of the company value.Conclusion is the acquisition of the company's cumulative excess return despite rising trend, but the statistic results and no significant difference.
Yu, Yang Rong (2ooo1 in Shanghai, Shenzhen two city from 1993 to 1995 38 mergers and acquisitions as a sample, we estimate the merger enterprise and target enterprise abnormal returns.Results: Shanghai target enterprise (1, 1) period and (5, 5) cumulative abnormal returns were 10.46% and 14.28%, and under 10% of the significance levels significantly, visible Shenzhen enterprises cumulative abnormal returns is not significant.
Takami, (2000) the performance of the market from 1997 to 1998, two occurred in the city of Shanghai deep restructuring of listing Corporation, indicated in the announcement before or after the announcement of a longer period than the Target Corp, Target Corp of the excess rate of return is slightly higher, but there is no statistically significant difference.
Hong Xixi, Shen x (2001) obtained through the empirical research on the Shenhua Industrial takeover case, in the current market condition of China, two class market can not be acquired to bring the income to the Target Corp.Zhang Xin (2003) is the creation of mergers and acquisitions value of the empirical research show that, merger and reorganization to create value for the Target Corp, the equity premium reached 29.05%; have a negative effect on acquiring company, acquiring company's stock premium for a 16.76%.Zhu Baoxian, Chen Huixia F20 (4)) merger effect by using stock law of 148 samples of the 2003 were analyzed, found that M & A events caused a strong reaction to the market in the short term, bring significant excess returns for the shareholders of the Target Corp.
two, based on the company's financial performance accounting research method
(a) review of Foreign Studies
Around the announcement of mergers and acquisitions, most research results show that, the acquirer's shareholders to obtain for the acquisition of interests, and the acquirer shareholders is not significant.M & a benefit to Target Corp inclined found, prompted the researchers to look to the evaluation of the performance of the company after M & A, formed a controversial domain in this respect.The samples were taken from different periods, research methods independent of each other, different people, different views. "Performance indicators to measure" in the selection, the results of this study are different.
Q series comparison before and after M & A in the performance of the company in the selected samples, many of the "long-term" scope in more than 10 years, that is to say 1 to 5 years more before M & A (5, 1) and M & A after 1 to 5 years (1, 5) the company's operating performance.In addition, the sample must also have public financial data complete, so the sample greatly narrowed the scope of.
Meeks (1977) was studied from 1964 to 1971 164 cases of merger events, he of the profits of the company as the core indicators, the results of the study indicate that the merger after the incident, the profitability of the Acquiring Company was significantly decreased.
After Meeks, many scholars have taken the same with Meeks method on the accounting statement.Kumar published his results in 1985, he carries on the analysis to the 1967 to 1970 241 cases of merger events ask, the results confirmed the Acquiring Company merged profitability declined significantly.His research results support the view of Meeks.
Ravenseralf and Seherer (1987) of the samples taken from 1950 to 1977 years, they came to the conclusion that, compared to the performance before and after M & a Target Corp with the industry average level, and did not exhibit improved momentum.Herman and Iowenstein (1988) f3~ samples taken from 1975 to 1983 years, the conclusions are basically the same
.Franks, HarrisandTitman (1991) was not found in the research on M & a performance after I years have significantly reduced conditions.
Healy, Palepu and Ruback (1992) in the performance measurement, abandoned may be manipulated accounting data and by using the concept of operating cash flow return (within a specific period of time operating cash flow divided by the initial market value of assets), the maximum return to operating cash flow to occur between 1979 January to 1984 June the amount of 50 case study, to observe the effect of mergers and acquisitions.They found that after the merger, the cash flow return rate decreased.Grawal, Jafe and Mandelker (19921 found the market adjusted earnings decline in mergers and acquisitions.DeYong (1993) TEA comprehensive index J.~_ with multiple input, multiple output determination performance tests were carried out on the 384 M & A, M & A can find small business performance.
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