Performance Analysis of Multinational M&A of Listed Companies--Based on Zipf Stock Price-Fundamentals Dynamic Evaluation Model’s Construction

Wenjie Liu

Abstract


In this paper, the multinational M&A of listed companies are taken as the research objects. The Stock Price-Fundamentals Dynamic Evaluation Model (SF-DEM) based on Zipf’s law is constructed. Through the complementary cumulative distribution, we analyze the stock price and fundamentals distribution and changes of listed companies before and after multinational M&A. The two-way fixed effect model is introduced to verify the SF-DEM model. The research shows that multinational M&A have got a positive response from the market. Short-term average cumulative abnormal rate of return reached 2.8% after the announcement day, which had a long-term synergy and promoted companies’ value; As investors expected that high-priced stocks have a poorer growth and higher thresholds, multinational M&A have a significant and lasting effect on the low-priced companies, while the impact on high-priced stocks is small and short; 80% of the price changes were determined by fundamentals, and reached 85% after M&A. Multinational M&A enhances investors’ expectations and then shows the value investment trends. 80/20 law is not affected by M&A, companies have strong heterogeneity and large differences.


Full Text:

PDF


DOI: https://doi.org/10.5539/ijef.v10n7p64

Copyright (c) 2018 wenjie liu

License URL: http://creativecommons.org/licenses/by/4.0

International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)  Email: ijef@ccsenet.org

Copyright © Canadian Center of Science and Education

To make sure that you can receive messages from us, please add the 'ccsenet.org' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.