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

Author

Listed:
  • Yuanyuan SUI

    (Ocean University of China)

  • Adelina DUMITRESCU – PECULEA

    (National University of Political Studies and Public Administration, Romania)

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.

Suggested Citation

  • Yuanyuan SUI & Adelina DUMITRESCU – PECULEA, 2016. "Financial risk identification and control of cross border merger and acquisition enterprises," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 14(144), pages 1368-1368.
    • Handle: RePEc:aud:audfin:v:14:y:2016:i:144:p:1368
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    References listed on IDEAS

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    1. Ghosh, Aloke & Jain, Prem C., 2000. "Financial leverage changes associated with corporate mergers," Journal of Corporate Finance, Elsevier, vol. 6(4), pages 377-402, December.
    2. Gwendolyn K. Lee & Marvin B. Lieberman, 2010. "Acquisition vs. internal development as modes of market entry," Strategic Management Journal, Wiley Blackwell, vol. 31(2), pages 140-158, February.
    3. Jinwook Lee & András Prékopa, 2013. "Properties and calculation of multivariate risk measures: MVaR and MCVaR," Annals of Operations Research, Springer, vol. 211(1), pages 225-254, December.
    4. Uriel Stettner & Dovev Lavie, 2014. "Ambidexterity under scrutiny: Exploration and exploitation via internal organization, alliances, and acquisitions," Strategic Management Journal, Wiley Blackwell, vol. 35(13), pages 1903-1929, December.
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    Cited by:

    1. Yulia Vertakova & Inga Vselenskaya & Vladimir Plotnikov, 2021. "Mergers and Acquisitions Risk Modeling," JRFM, MDPI, vol. 14(9), pages 1-24, September.

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    More about this item

    Keywords

    Financial risk; cross-border M&A; Dupont method; mechanisms of financial management.;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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