Abstract: There are different views on the financial risk of enterprise merger and acquisition. Zhao, a domestic risk management scholar, believes that M&A's financial risk refers to the possibility of financial crisis or even bankruptcy caused by changes in financing and capital structure. At the same time, the increase of shareholder's income volatility caused by M&A is also a financial risk. Geoffrey C. Hooke, a famous American investment banker, believes that M&A's financial risk is caused by borrowing money for acquisition, which limits the buyer's ability to finance operations and repay debts at the same time. "Financial risk is determined by some factors, such as the amount of debt used to finance the transaction and the amount of debt that the target enterprise will bear by the buyer." From the perspective of corporate finance, some scholars believe that M&A's financial risks should contain broader connotations, including "the uncertainty of the deterioration of the company's financial situation or the loss of financial results caused by various financial activities involved in M&A".

Specifically, M&A's financial risk refers to the uncertainty that M&A's pricing, financing, payment and other financial decisions lead to the deterioration of financial situation or the loss of financial results, and refers to the financial distress and financial crisis of enterprises caused by the serious deviation between M&A's expected value and its realization. The above definition is an abstract summary of financial risks from a theoretical depth. In order to make readers have a more intuitive understanding of the financial risks of mergers and acquisitions, this paper intends to make a new interpretation of the financial risks of mergers and acquisitions from several cases.

On M&A's Financial Risks from the Perspective of "Capital Market Efficiency Theory"

The imperfection of the real capital market makes the price of the capital market not fully reflect all the information of the enterprise. Therefore, there may be some deviation between market price and enterprise value. When the capital market price is lower than the actual value of the enterprise it represents, mergers and acquisitions will become possible. The reason for this deviation involves another aspect of the effectiveness of the capital market, that is, the inherent effectiveness of the capital market itself. The hypothesis of capital efficiency put forward in view of the off-market efficiency of capital only thinks that the market price reflects different information a priori, but does not explain why there is such a difference. The inherent effectiveness of the capital market shows that the capital market is influenced by many factors, such as the number of market participants, the number and quality of information intermediaries, legal requirements and the advanced level of information transmission equipment. In the process of capital market operation, any of the above factors will cause asymmetry in information distribution, thus forming a situation in which market prices are separated from enterprise values. Within an enterprise, its knowledge (incomplete information) and computing power (complexity) will affect its M&A decision. Even the same information, there may be differences in understanding. Therefore, information asymmetry is based on the asymmetry of people's ability to obtain information. This is one of the sources of M&A risks.