| Summary: | 碩士 === 國立臺灣大學 === 會計學研究所 === 98 === Many companies were influenced substantially during the financial crisis in 2008. But curiously, the number of mergers and acquisitions (M&A) in 2009 was as high as that in 2008. However, according to prior research, acquirers might suffer from negative long-term performance after M&A. Take stock return for example, acquirers went through negative or not significantly negative stock return after M&A. As for accounting index, there is no consistent result. But why do companies still merge with other companies regardless of the fact that they might experience negative performance? Do they have distinct concerns other than stock return and accounting index?
Compared with internal expansion, growth through M&A may be a much more rapid way, like increasing market share or obtaining key patents. Although M&A provides a shortcut to growing markedly, it also provides various risks at the same time. These risks might vary from operating risk to strategic risk. Among these risks, I think sales risk should be listed as one of the most essential risks, given the importance of sales revenue to companies. Moreover, the data is publicly obtainable to an outsider. Therefore, I focus on sales risk and separate it into two parts, market share risk and market size risk.
I anticipate that every company has its own risk management system. The goal is to control its own risks. And M&A is part of the risk management system, aiming to reduce sales risk. When a company decides to merge with one another, there might be tens or hundreds of potential targets for it to choose. Whether the target is appropriate for the acquirer or not will impact the integration of post acquisition, which plays a crucial role to achieve its strategy and reduce its risks. That’s why choosing an adequate target matters in M&A.
Varied from previous research, this thesis evaluates M&A from a management- accounting point of view. I analyze how the characteristics of targets influence sales risk, which might provide some useful criteria for acquirers. I include those publicly traded Taiwan companies undergoing M&A during 2000 to 2004 in my sample. Following the approach in previous research (Zhang, 2009), I evaluate the impact of change in market share and change in market size on stock return. Besides, I define the difference of change in market share(CMS) and change in market size (CS) before and after acquisition as market share risk (MSR) and market size risk (SR) respectively. Furthermore, I test various types of characteristics of targets, in order to decide which characteristics of targets impact these two risks most significantly.
The main empirical findings are summarized as follows: Firstly, under vertical merger, if ROA of targets is better, it can reduce MSR more significantly. The evidence suggests that a target with better ROA under vertical merger might assist the acquirer to integrate quickly, so that it can go into production as soon as possible to fulfill the need of the market. Therefore, it decreases MSR. Secondly, horizontal merger facilitates MSR reducing. It supports market synergy theory, which suggests that when there are a few competitors in the market, the rest have more control over the market, thus reducing MSR. Besides, operating synergy also makes sense, which creates economies of scale and decreases cost per unit, thus reducing MSR. Thirdly, a target with higher DOL will increase SR significantly. The evidence suggests that while DOL of a target is higher, its fixed cost is higher as well. When total revenues of the entire industry decline, the acquirer is more vulnerable to the change, thus facing higher SR.
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