Evolutionary characteristics of M&A involving parties of Chinese listed companies based on two-mode network

Chen Guo, Yuchen Song, Huajiao Li, Nairong Liu and Sui Guo

Physica A: Statistical Mechanics and its Applications, 2019, vol. 532, issue C

Abstract: As an important research tool in the field of economic physics, complex networks have been widely used in various fields. In recent years, research on heterogeneous networks has become a new hotspot. For mergers and acquisitions, each deal consists of two aspects, namely, concerned parties and the deal event. There are heterogeneous features among the subjects, which could form a heterogeneous network, so the potential reasons for the existence of mergers and acquisitions involving multiple parties still need to be explored. With the continuous development of China’s market economy and the continuous increase in the number of listed companies, mergers and acquisitions have become an important means for listed companies to optimize their allocation of resources and improve their industrial structures. The increasing size and quantity of mergers and acquisitions have made the relations among concerned parties closer. Therefore, a complex network relationship tends to form between merger and acquisition deals. To this end, this paper collected 2006–2015 merger and acquisition research data from Chinese listed companies and built a single mode derivative M&A network where two parties are involved in the same M&A event. Then, the evolutionary trend, community relations and M&A preference of the parties involved were explored by quantitative and qualitative analyses. The main research results include the following. (1) Mergers and acquisitions revealed a trend of dramatic increase, with a sharp increase in 2015. (2) Communities were apparently separated in the M&A network, with few contacts between each other. Most of the deals of the parties involved in mergers and acquisitions of the listed companies were sporadic, and there were frequent mergers and acquisitions between a small number of M&A subjects. But now the M&A market has changed and the so-called ”two-eight” principle has been gradually broken down. More companies will also have frequent M&A transactions. (3) Parties involved in mergers and acquisitions were characterized by assortativity, which still exists although it has gradually weakened in the last five years, indicating that the parties involved in mergers mostly choose the target company of the merger according to their needs. The research results of this paper provide a method for further research on the M&A derivative network of the listed companies and the expansion of complex network applications as well as new ideas for the study of M&A networks.

Keywords: Co-holding relationship; Mergers and acquisitions; Listed companies; Two-mode network; Evolutionary characteristics (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:532:y:2019:i:c:s0378437119310994

DOI: 10.1016/j.physa.2019.121870

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