Ultimate Control, Free Cash Flow and Output efficiency from Merger Acquisitions of Listed Companies－－An Empirical Test from Perspective of Total Factor Productivity

摘要

Based on the sample of 170 listed companies that merger & acquisitions (M&A) occurred in Shanghai and Shenzhen A-share markets in 2005, this study examines the change in output efficiency from M&A of listed companies with the aid of total factor productivity (TFP) index, revealing the effect of ultimate control and free cash flow on the change in output efficiency from M&A. Empirical results show that the output efficiency of the acquiring companies does increase after M&A. However, the synergies need integration for some time to be detected. The cash flow right of ultimate control shareholder, which has incentive effects on the improvement of M&A efficiency, shows a significantly positive correlation with the output efficiency from M&A. Meanwhile, the separation between the ultimate control right and cash flow right has a negative impact on the increase in output efficiency from M&A. However, the effect is not statistically significant. In addition, inefficient M&A is carried out more easily in those firms with more sufficient cash flow. To our knowledge, the paper is the first literature that combines TFP, ultimate control and free cash flow into an integrated framework to study output efficiency from M&A. The conclusion could provide empirical support to further analyze motives of the change in output efficiency after control right variation.