阅读|中国并购动力的驱动因素：上市公司的经验证据
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Driving factors of merger momentum in China: empirical evidence from listed companies
Lei Fu
Department of Finance, School of Economics and Management,
Hainan University, Haikou, China, and
Qian Wang
Tax Service Branch Haizhu District Local Taxation Bureau, Guangzhou, China
Lei Fu, Qian Wang, (2019) "Driving factors of merger momentum in China: empirical evidence from listed companies", China Finance Review International, Vol. 9 Issue: 2, pp.235-253, https://doi.org/10.1108/CFRI-06-2017-0153
摘要 Abstract
The purpose of this paper is to study merger
momentum and its driving factors in China by sampling 376 listed bidders
from 2008 to 2013. The empirical model captures the dependency of
market reaction on recent merger and stock market states. The
independent variables are designed from two dimensions, i.e. at the
level of market-wide as an integral and bidder-specific as individuals.
Furthermore, both the market and bidding firms contain merger momentum
and market momentum, respectively. The empirical results show that there
is merger momentum in the market. Particularly, merger momentum is
significant both in short run and long run for the mergers with cash
payment, which supports the synergy effect. It also implicates the
mergers with stock driven by investor sentiment. Besides, investors’ over-optimism is significant in the bull markets while managerial hubris is found in the bear markets.
Keywords: Synergy, Bull and bear market, Investors’ overoptimism, Managerial irrationality, Merger momentum
研究假设Research Hypotheses
H1. If the market reaction to a merger announcement is positively correlated to recent market state, the market exhibits merger momentum. If this relation reverses in the long run, overoptimistic investor sentiment is the driving factor for the momentum.
239 Driving factors of merger momentum in China. Otherwise it is the synergy effect in the momentum. Moreover, if the managers behave irrationally, the long term valuation of the merger will be weakened.
H2. Merger momentum prevails both in the bull market which is full of overoptimistic sentiments and in the bear market which is relatively pessimistic and lack of short selling. However, the acquisitions initiated in the bull market are expected to receive a more positive market reaction during the announcement period and more negative market reaction in the post-announcement period than the acquisitions initiated in the bear market.
研究设计 Research Design
Data and sample
The study looks at China M&As with relevant data given in the CSMAR. The criteria of the sample selection are as follows:
(1) the sample comprises public bidding firms traded at Shenzhen Stock Exchange with agreement transfers between January 1, 2008 and December 31, 2013;
(2) there was a change of the first major shareholder who controlled over 30 percent stake after the merger was completed;
(3) the merger was completed successfully;
(4) bidder who makes multiple attempts to acquire the same target within one year before or after the announcement is eliminated;
(5) bidder is eliminated if the major events such as dividend implementation or earnings report were announced within 90 days before and after the merger announcement; and
(6) bidder who went bankruptcy within two years since the merger announcement is eliminated.
The final samples are of 376 bidders.
Variables
Model
实证结果 Empirical results
Regression results for the short-term and long-term merger momentum:
Regression results for the bullish and bearish merger momentum:
结论 Conclusions
First, the results of short-run performance show merger momentum in Chinese capital market. The momentum is especially stronger during bull period, reflecting that over optimism is the key to drive bidders’ instant performance increasing markedly. It simultaneously supports the asymmetric sentiment of investors under the bull-bear cycles. When the market is bullish, investors are more optimistic to the merger event leading to a considerable profit earned by the bidding firm around the announcement. While in the bear market, even M&As are favorable to the stock market, it is still hard to get great benefits for the bidders because of the gloomy and prudential mood filled in the market.
Second, the results of long-run performance show several impacts on merger momentum. On the one hand, there are synergy effects in the mergers paid by cash. That is, there are positive shocks from the mergers with cash, such as strategic expansion or management improvement. So the market gives positive response as well. On the other hand, the comparison between cash sample and full sample infers over-optimism may be the driving force for the mergers paid by stocks. As a whole, the insignificant longterm results in the full sample may owe to the offset of these two impacts with opposing expectations to each other, which are synergy effect and investors optimism influencing cash and stock mergers, respectively. In a word, the cause of merger momentum is so complicated that it is unwise to make a simple judgment on whether the long-run abnormal return reverses or not.
Third, the study also offers the examination of managerial irrationality. The empirical results point out that the senior executives of the bidders have hubris when they make acquisition decisions. Inevitably, this makes a negative influence on the merger performance to some extent.
To sum up, the explanatory factors for merger momentum in China are complex. Three impacts with different effects interact with one another. They are investor sentiment and managerial hubris with negative effects resulting in reversal abnormal return in the long run, and synergies with positive shocks resulting in no reverse at all. The limitation of the paper is insufficient analysis of the mergers financed by stocks, which will be the focus for future study.
作者风采
《中国金融评论》介绍
China Finance Review International publishes highly original and quality theoretical and empirical articles on reform and opening, financial and economic issues emerging in the economic development, and system transformation in China.
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