Performance Analysis of Multinational M&A of Listed Companies--Based on Zipf Stock Price-Fundamentals Dynamic Evaluation Model¡¯s Construction

Wenjie Liu

International Journal of Economics and Finance, 2018, vol. 10, issue 7, 64

Abstract: In this paper, the multinational M&A of listed companies are taken as the research objects. The Stock Price-Fundamentals Dynamic Evaluation Model (SF-DEM) based on Zipf¡¯s law is constructed. Through the complementary cumulative distribution, we analyze the stock price and fundamentals distribution and changes of listed companies before and after multinational M&A. The two-way fixed effect model is introduced to verify the SF-DEM model. The research shows that multinational M&A have got a positive response from the market. Short-term average cumulative abnormal rate of return reached 2.8% after the announcement day, which had a long-term synergy and promoted companies¡¯ value; As investors expected that high-priced stocks have a poorer growth and higher thresholds, multinational M&A have a significant and lasting effect on the low-priced companies, while the impact on high-priced stocks is small and short; 80% of the price changes were determined by fundamentals, and reached 85% after M&A. Multinational M&A enhances investors¡¯ expectations and then shows the value investment trends. 80/20 law is not affected by M&A, companies have strong heterogeneity and large differences.

Date: 2018
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