Merger And Acquisition Thesis

Master Thesis

“EMPIRICAL ANALYSIS OF COUNTRY SPECIFIC FACTORS THAT AFFECT CROSS-BORDER MERGERS AND ACQUISITIONS”

- Evidence from Chinese acquisitions in Europe

Submitted by

Violeta Rendevska

Under The Guidance of

Prof. Chunbo Liu

Institute of Financial Studies

Prof. Yan Dong

Research Institute of Economics and Management

Southwestern University of Finance and Economics

Research Institute of Economics and Management

February, 2018

Declaration

I hereby declare that this thesis was performed and written on my own and the references and the resources used within this work have been explicitly indicated.

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(Violeta Rendevska)

Dated:

Chengdu, P.R. China

Abstract:

Key words:

Economic growth brings lot of changes in a country by the circulation of wealth, but economic growth relies on financial development. According to Rajan and Zingles (1998), financial development has a positive impact on economic growth while Levine (1997) states that the financial development and economic growth are positively related. When it comes to economic growth and welfare, increased mergers and acquisition (M&A) over the past few years we can notice significant activity. The huge transactions that were happening, especially cross-border transactions that have been made, arise the interests among plenty of scholars. A good amount of studies in the market for corporate control have described that “mergers and acquisitions” (M&A) is an aggressive strategic growth choice to gain ownership and control over the target entity. As Trautwein (1990) mentions that M&A is usually used as a vehicle for growth, cross-border mergers and acquisitions are characterizing strong dedication and to create value from acquiring foreign targets on long-term is on high risk. It is recognized that cross-border mergers and acquisitions expand the knowledge base of the acquirer including new technology and mixture of different ways of managing the resources. To be more exact, cross-border mergers and acquisitions nowadays are used as a progressively common strategy by firms to create value in the fiercely competitive global market. However, based on the concept, cross-border mergers and acquisitions are not much different from the domestic ones. In order to grow, companies are choosing mergers and acquisitions as a way to enter the market, vertical integration and diversification. As for cross-border mergers and acquisitions the main motives of increasingly acquiring foreign target companies are market power, overcoming of market entry barriers, reducing competition, changing