Empirical study on the stock-for-stock M&A performance of Chinese listed companies

As the method of payment in company strategy M&A, stock-for-stock is not only the payment between listed companies, but also an effective instrument for solely state-funded enterprises to get listed on the stock market by M&A. This paper verifies the performance of Chinese listed companies which happened M&A events during the period 1998 to 2007 after M&A from the perspective of short-term and long-term event study. Empirical results show that shareholders of the majority acquiring firms gain positive average abnormal return in one month after M&A, but suffer significant wealth loss in one to two years. Finally, this paper gives a profound analysis of causes of low performance in stock-for-stock, and also gives some advises to improve the M&A performance.