The Study on the Influence of the Motivation of the Domestic Enterprises’ Mergers and Acquisitions on the Financing Instruments Choice

Abstract

The Financing Instruments Choice is a key to the success of Enterprises’ Mergers and Acquisitions (M&A). Most of the previous studies on the M&A financing instruments choice only focus on the influence of the enterprises’ financing structure rather than the motivation of M&A. This paper tries to use case study methodology to indicate the influence of the special motivations of domestic enterprises’ M&A on the choice of financing tools. The results suggest that the non-market motivation of M&A in China has decisive impact on the choice of financing tools. Besides, the “internal people control under administrative intervention” determines that managers in the large and medium state-owned companies more focus on financing risk rather than financing cost and benefits. Meanwhile, the finance regulation policy and market environment, and the corporate M&A driven by local government aiming at “maintaining stability” are all motivation of the Domestic Enterprises’ M&A on the Financing Instruments.