Mergers and acquisitions of financial risks [Abstract] mergers and acquisitions as a market economy under the conditions of an enterprise behavior in Western countries has been 100 years of history, and so far the world’s six M & A wave has emerg ed, of which the network economy as a platform for the sixth M & A wave has began to take shape. Under market economy conditions, as long as there is a mergers and acquisitions, M & A behavior is hard to avoid financial risks, this paper through several mergers and acquisitions case of the M & A briefly sort out the financial risk. [Keywords:] M & A financial risk information asymmetry
First, the dimension of M & A risk - M &
A New Interpretation of Financial Risk
For mergers and acquisitions of financial risks have different views. The risk management of domestic scholars Zhao Wu believes that M & A financial risk is the acquisition of financing and capital structure changes caused by the
financial crisis, even lead to the possibility of bankruptcy at the same time, mergers and acquisitions leading to greater shareholder returns is the volatility of the financial risk of the a form of expression. Well-known U.S. investment bank scientist Jeffrey. C. Hooker believes that mergers and acquisitions of fi
nancial risk is due to finance through debt for the acquisition of the operating constraints of the buyers ability to finance debt at the same time due to ‘financial risk by the use that the amount of debt financing transactions and the parties will be borne by the target company to purchase the amount of debt and other factors’. Money from the company point of view, some scholars believe that mergers and acquisitions of financial risk should include a broader meaning, including ‘due to mergers and acquisitions involving financial activities of the enterprise arising from the deteriorating financial position or financial results, the uncertainty of loss’. Specifically, corporate mergers and acquisitions of financial risks should be referring to the pricing because of mergers and acquisitions, financing, payment, and other corporate financial decision-making caused by the deteriorating financial position or financial results of the uncertainty of loss is the expected value and value of mergers and acquisitions to
achieve a major departure from the a result of corporate financial distress and financial crisis. The above definition are from a theoretical depth of the financial risk of the abstract generalizations in order to allow the reader to the acquisition of financial risk have a more intuitive understanding of this case to be starting from a few M & M’s financial risk to enterprises a new interpretation.
Case 1: Chifeng City, Chifeng Shuan gma the Group’s core business has been built 13 years sugar pr
ofits, accumulated profits and taxes paid 130 million yuan. 90 years later, business leaders mistakenly believe that the development of enterprises should be on the scale, under the auspices of the local government and blindly mergers and sugar main businesses are not associated with the Chifeng glass factory, the second system, wineries, chemical plants and other cross-udan industry loss-making enterprises to form enterprise groups, and the assumption of debt 45.71 million yuan, the new injection of capital 89.54 million yuan. Eventually lead to the Group of 430 million yuan debt, debt rate of 95% and serious financial trouble. ( ‘China Business Times, ‘1998-year in May)
Case 2: July 1992, T. H arry Kewell’s (T. Cowie) of the vehicle
traders Henry (Henlys) to make hostile takeover. The beginning of a stock-for-2 stock bid, was later changed to 7-for-10. Another option is a stock Kewell share plus 40 pence in cash-for-2 stock Henry shares. The acquisition failed, but during the whole acquisition period, Kewell’s stock goes down, thus reducing the acquisition of Henry shareholder value. Some shareholders, Henry said, If you add some cash would be more persuasive. ( ‘Financial Times, ‘1992 8 28) From the formal point of view, these mergers and acquisitions were the direct cause of failure was due to mergers and acquisitions strategies, the target company’s options, M & A pricing policy and post-merger integration result, while both the performance of the financial risks for the acquisition of corporate failure. Therefore, I beli
eve that mergers and acquisitions of financial risk is a value risks, the risks of various mergers and acquisitions on a comprehensive reflection of the magnitude of value is to run through the whole process of mergers and acquisitions uncertainties on the expected value of the negative effects and impact. In other words, corporate mergers and acquisitions of financial risk is a comprehensive general risk factors in response to financial concentration.
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Second, corporate mergers and acquisitions of financial risk factors - information asymmetry
(A) From the ‘capital of the efficient market hypothesis’ to see mergers and acquisitions of financial risks
The real capital market imperfections makes the price of the capital markets, and did not adequately reflect all the information relevant enterprises. Therefore, the market prices and business that may exist between the value of some degree of deviation, when the capital market price is lower than on behalf of the real value of companies, mergers and acquisitions have a resulting possible. Cause this deviation due to the effectiveness of the capital market on the other hand, that is, the operation of capital markets, its own internal validity. For the capital market, capital of the validity of the hypothesis i
sort of in orders valid a priori belief that market prices reflect the information there is a difference, but did not explain why the existence of such differences. The internal validity of capital markets shows that the transmission of information on the

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