Corporate M&A Payment Method and Stock Market Reaction: Evidence from China's Listed Companies

doi:10.16382/j.cnki.1000-5579.2018.05.019

Abstract

Abstract:

Using the event study method for the stocks returns of China's listed companies which have M&A activity during the period from the first half of 1999 to the first half of 2017,this paper finds that:(1) cash payments,equity and asset payment,or hybrid payment can significantly increase the secondary market stocks return for the major asset M&A of listed companies in China,and there is a significant daily effect of the announcement of M&A of listed companies in China;(2)the day-to-day announcement effect will continue until the 6^th trading day after the announcement date. The daily effect of the announcement of major asset mergers and reorganizations of cash payment can only last 4 trading days after the announcement,while that of equity and asset payment or hybrid payment can last 6 trading days;(3)as for the cumulative abnormal returns (CAR)on the 15 trading days after the announcement,the CAR of hybrid payment is 0.242,which is much higher than that of equity and asset payment as 0.216 and that of cash payment as 0.108;(4)the CAR of hybrid payment of privately-owned companies is much higher and more obvious that that of state-owned enterprises.

Key words: acquisition and reorganization, payment methods, cash payment, equity and asset payment, hybrid payment

LI Ming-hui, WU Xiao-wei, ZHOU Bin-quan. Corporate M&A Payment Method and Stock Market Reaction: Evidence from China's Listed Companies[J]. Journal of East China Normal University (Philosoph, 2018, 50(5): 152-161.

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