Management Review

›› 2015, Vol. 27 ›› Issue (9): 231-240.

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Case Study of the M&A between Youku and Tudou——Based on Event Study Methodology and Accounting Index Analysis

Yun Xin1, Xin Ling1, Liu Ying2, Qiao Han3   

  1. 1. Academy of Mathematics and System Science, Chinese Academy of Sciences, Beijing 100190;
    2. School of Management Science, Beijing Union University, Beijing 100101;
    3. School of Economics and Management, University of Chinese Academy of Sciences, Beijing 100190
  • Received:2015-04-04 Online:2015-09-30 Published:2015-09-29

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Abstract:

Video site is one of the fastest growing industries of Internet in recent years. Although the market size of this industry is steadily expanding, the loss situation that video sites have long faced is still a problem to be solved. In order to achieve economy of scale, reduce costs and pressure of competition, mergers and acquisitions (M&A) between video sites frequently occur. Whether the video sites can get rid of the dilemma of long-term loss through M&A has been a hot topic in the academic circle. Taking the case of the merger of Youku and Tudou as an example, this paper focuses on the deep influence of the M&A on the enterprise performance and future development of the online video industry from the perspective of the short and long term based on event study methodology and principal component analysis. The results show that positive value has been made for stock holders in the short term and there is a stable upward trend of enterprise performance in the long run through the M&A between Youku and Tudou. However, due to the fact of high operating costs of video sites, it is the revolutionary profit model of enterprise but not M&A that can fundamentally reverse the overall situation of long-term loss of video sites.

Key words: Youku, Tudou, M&A, event study methodology, principal component analysis, case study