Study on the Comprehensive Scoring Model for the Performance of Mergers & Acquisitions with Related Party of Listed Companies

ABSTRACT

since there are some special problems in the mergers & acquisitions with related party in listed companies in China, it gradually becomes the hot issue among the economists. In this paper, a comprehensive scoring model is constructed on the basis of principal component analysis from the relationship between domestic and foreign M&A practices and performance of listed companies. Empirical analysis is launched with the data of 100 listed companies executing the M&A with related party in 2011 and 13 performance indexes selected from Shanghai and Shenzhen stock market, and finally, the comprehensive model applied for 7 principal component sand calculation and scoring is determined. The final comprehensive scoring results show that the corporate performance will decline remarkably in the same year of the implementation of M&A with related party, and it would rise again a year later. It also indicates that there are indeed some improper operations in the M&A with related party of listed companies, which may frustrate the minority shareholders and vast employees, and result in the declining performance after the M&A with related party.

Keywords:

Comprehensive grading , principal component analysis (PCA), corporate performance, listed companies, mergers and acquisitions (M&A) with related party.