M & A of Listed Real Estate Companies and Default Risk of Credit Bonds under the Counter-Cyclical Background

Abstract

Based on the credit bond data issued by listed real estate companies under the industry classification standard of China Securities Regulatory Commission from 2018 to 2020, the impact of mergers and acquisitions (M & A) of listed real estate companies on their credit bond default risk is empirically studied under the counter-cyclical background. The empirical results show that the M & A strategies of real estate companies will not have a significant impact on the default risk of their bonds alone; under the pressure of slowing economic growth in the counter-cyclical context, however, the implementation of aggressive expansion M & A strategies of real estate companies will increase the default risk of their bonds. For other factors that affect the default of credit bonds of real estate companies, at the external level, GDP is negatively related to the default risk of credit bonds of real estate companies; at the internal level, the level of leverage is positively related to the default risk of bonds, while the asset size, profitability, solvency and M & A strategies of companies are negatively related to the default risk of bonds; while at the bond level, the maturity and liquidity of bonds are negatively related to default risk.