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Financial risk identification and control of cross border merger and acquisition enterprises

Yuanyuan Sui () and Adelina DUMITRESCU – Peculea ()
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Yuanyuan Sui: Ocean University of China
Adelina DUMITRESCU – Peculea: National University of Political Studies and Public Administration, Romania

The Audit Financiar journal, 2016, vol. 14, issue 144, 1368

Abstract: Mergers and acquisitions (M&A) are basic channels for modern companies’ growth. With globalization speeding up, multinational companies increasingly take on M&A activities to strengthen global market positions and raise competitiveness. In recent years, M&A activities have played an important role in Chinese companies. Financial risk is inherent to M&A processes in cross-border companies. Also, more than 50% of Chinese companies did not achieve their M&A goals. Therefore, recognizing and controlling financial risk is essential. This paper analyses the financial risk from different perspectives and then provides suggestions by analysing a typical M&A case: Bohai Leasing merger with Seaco Company. Complete due diligence and clear M&A strategies, combination of various financing instrument, strategic paying methods and finance integration are some ways for controlling and decreasing finance risk.

Keywords: Financial risk; cross-border M&A; Dupont method; mechanisms of financial management. (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:aud:audfin:v:14:y:2016:i:144:p:1368