Author(s)

Yao Lu

Corresponding Author

Yao Lu

Abstract

In recent years, many manufacturing enterprises in China have implemented international strategies through cross-border mergers and acquisitions(MA), and expect to enhance their core competitiveness by acquiring external knowledge and technical resources. Accompanying them are merger and acquisition risks. The purpose of this article is to analyze the impact of cross-border MA on corporate risk, and provide reference opinions for corporate MA decisions and investors' future investment. This article analyzes the impact of cross-border MA on the risks of Chinese listed companies by conducting empirical research on mainland Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges and participating in cross-border MA from 2008 to 2013. It is concluded that the highest percentage of security companies in the manufacturing industry in the year before the merger is 72.41%, and the lowest rate in the year of the merger is 48.28%. One to two years after the merger, the ratio of security companies has increased, but has not been able to return to the level before the merger. It shows that after cross-border MA, manufacturing enterprises caught in different degrees of bankruptcy increased by 10-20%. The safety ratio of non-manufacturing companies has not changed before and after the merger. Taken together, cross-border MA will have a negative impact on the financial status of enterprises, increase their financial risks, and increase their difficulty in managing financial risks.

Keywords

Listed Companies; Cross-Border Mergers and Acquisitions; Financial Risks; Mergers and Acquisitions Risks