Research on Financial Risk Identification.pdf

May 2005, Volume 4, No.5 (Serial No.23) China- USA Business Review, ISSN 1537-1514, USA Research on Financial Risk Identification and Assessment in Merger Acquisition * ** Yongmei Cui Liwei Wang Beijing Jiaotong University Abstract: Merger acquisition (MA) is a business activity full of high risk that exists in each process. There are different kinds of risks, whatever they are, they will influence the financial risk through the MA cost unexceptionally, so financial risk is one of the most important factors in MA activity. At present, there are different kinds of definitions of financial risk in MA. This paper defines the concept of the financial risk in MA, and then, it analyzes some factors, such as uncertainty and information asymmetry. Finally, it puts forward the identification factors of financial risk in MA and establishes a fuzzy assessment model to measure financial risk in MA. Key words: financial risk of MA uncertainty information asymmetry identification factors fuzzy assessment 1. Introduction With the development of Chinese economy, there will be more and more MA activities in China in the future, which will become the focus among all the MA activities in the world according to some experts. The enterprise’s MA is a business activity full of high risk, which exists in each process. There are different kinds of risks, such as strategy risk, policy risk, system risk, law risk, industrial risk, operating risk, integration risk, etc. Whatever it is, it will influence the financial risk through the MA cost unexceptionally, so financial