Impacts on company after cross-industry M&A —Evidence from the United States public companies

Abstract

This paper used cases of United States public companies to study the impacts on companies after cross-industry M&A. Through Synthetic Control Method (SCM) to conduct a research on the effects on four aspects: company performance; investment & capital structure; cost of selling, general and administrative expense and price-cost margin. Th empirical results show : Firstly, for the effects of company performance, after M&A, there is significant negative effects on Tobin’s Q in the short-term, middle-term, and long-term. And there is significant negative effects on Sales growth rate in the middle and long term. However, after M&A, ROA increased in the short-term, middle-term, and long-term; ROE increased only in the short term. Secondly, for investment & capital structure, there are not significant impacts on Debt to Total Assets and Capital Expenditures to Total Assets. Thirdly,there is significant negative effects on Selling, General and Administrative Expense Rate in the short-term, middle-term, and long-term. Finally, there is significant positive effects on Price-cost margin in the short-term, middle- term.