| Since the emergence of commercial activities,mergers and acquisitions(M&A for short in the following content)have been one of the most important and widespread corporate activities.Enterprises achieve aims of mergers or acquisitions through the exchange of equity or assets.When looking around the world,since the beginning of the 20 th century,five widely consenced waves of M&A had shown up in the United States,which has mature developed market and active economic activities.The scale involved and the scope of influence have continued to expand.Up to now,M&A have already been beyonde national boundaries,and become a global activity,giving birth to the emergence of many multinational giant corporations.In China,since the reform of the market economy,under the dual effects of political changes and rapid economic development,the autonomy and abundance of corporate activities have greatly increased,and M&A activities have become more and more common.Only domestic M&A activities(both the buyer and the target are in China)counted,the annual transaction value has risen to 2.4trillion yuan in 2018,which has tripled from the 800 billion yuan in 2009.In academia,this phenomenon has also attracted the attention of many scholars,but the topic of M&A is so grand,few people can give a universal interpretation framework,but it also makes the discussion in this field valuable.There are so many theories that emerge from different angles trying to interpret,determine,or guide M&A phenomeny,which also brought unique contributions to this topic.This dissertation attempts to analyze along the research framework of Behavioral Theory of the Firm and Prospect Theory,and builds a comprehensive framework which takes motivations,actions,and consequences of M&A actions into consideration.This dissertation tries to answer the following questions: Why do companies take M&A?In M&A,how do companies choose ideal target companies? In these decision-making processes,what factors will affect the decisions? What do the actions of M&A mean to companies,or,in terms of the most direct way,how do investors judge and reprice the companies that take the action of M&A?Taking these questions as the keys of discussion,basing on the study,combination,and logical derivation of former research literature,this dissertation makes several hypotheses,and take the data of China’s A-share listed companies from 2004 to 2018 for a total of 15 years as the sample,to conduct an empirical test,and the following are the main conclusion:First of all,the negative attainment discrepancy from the view of forward-looking faced by companies has a significant positive effect on companies’ M&A decision.According to the main opinions of Behavioral Theory of the Firm and Prospect Theory,by judeging the discrepancy between the desired goal and the achievable level,companies adopt corresponding problem-searching behaviors.Due to the loss-averse psychology,in order to avoid losses,companies will prefer solutions that are of more risk.Seeking to reverse the loss through taking actions that of both higher potential returns and uncertainty;M&A can greatly expand the size of the company’s business and achieve performance reversal,but at the same time,it also faces various difficulties and the realization of returns is of high uncertainty,it is a typical risk-taking action.This dissertation finds that the greater the negative attainment discrepancy from a view of forward-looking,in order to avoid losses through risk-taking behavior,the company’s probability,the frequency and the degree of involvement of taking actions of M&A will be stronger.Secondly,for companies that already made M&A decisions,the negative attainment discrepancy from a view of forward-looking is positively related to the company’s tendency to merge a company of related industry or from other region.In the short-term,when decisions are made to deal the discrepancy,merging companies which are in the same industry or upstream or downstream industries is a choice with higher uncertainty and potential returns.It may be difficult to avoid a unfavorable impact that affect the whole industry by merging a company in related industries,so it is difficult to see an improvement on performance in the short-term,nor can it help companies achieve investment diversification,which will further increase the risk of industrial concentration.However,the rewards if the M&A action gets done successfully are huge,not only the total performance will show a reverse,but also the main business will come to a turning poin,which is more important for the company.Therefore,under the pressure of a negative attainment discrepancy from a view of forward-looking,companies are more inclined to continue to invest in their existing business and carry out M&A actions in related industries.Similarly,merging a company in other region means greater difficulties and uncertainty,but the potential rewards are huge too,which can bring a broader market for the company,and the company can also obtain diversified knowledge and cultural exhanges through exchanges and communication in different regions.For companies with greater negative attainment discrepancy from a view of forward-looking,this more adventurous choice will be more attractive.Thirdly,the political uncertainty of the enterprise plays a negative role in regulating the positive relationship between the negative attainment discrepancy from a view of forward-looking and the preference of making M&A decisions.The change of local government officials means extra uncertainty to the local policy environment.For companies in this area,the resources and predictability exist before will be impaired,the company are facing additional systemic risks,and the perception of its own expectations will become harder.Therefore,as the political uncertainty increases,companies’ behaviors tend to be more conservative,and their response to the negative attainment discrepancy from a view of forward-looking will also become weaker.The relationship between the negative attainment discrepancy from a view of forward-looking and the tendency,frequency or degree of involvement in M&A actions will also weaken.Fourthly,when corporate executives are in the year of their “benming”,their tendency to choose to conduct M&A actions and their preference of merging companies in related industries under the pressure of negative attainment discrepancy from a view of forward-looking will be weaker.In Chinese folk custom,each year corresponds to one of the twelve animals,which are called as Chinese zodiacs,the year of someone’s “benming” refers to the year that correspnds to the same animal symbol as the year that person gave birth,in Chinese folk custom,people will encounter more difficulties and risks in the year of their “benming”.The senior managers of the enterprise will be influenced by this custom and culture,because they learnt about it during their growth,interacted with it when communicate with others,and got exposed under the pressure of social standardization.At the same time,when making the M&A-related decision,the senior managers of the enterprise face great psychological pressure and will be more inclined to believe in "superstition" in order to find inner peace.Due to these mechanism,compared with those who are not in their year of “benming”,senior corporate managers in the year of their “benming” tend to be more sensitive to risks,and will adopt a more conservative attitude to deal with the negative attainment discrepancy from a view of forward-looking.The possibility,the frequency,and the degree of involvement of taking M&A actions will have a weaker positive relationship with the negative attainment discrepancy from a view of forward-looking,and the preference of merging companies in related industries will be weaker,the relationship may even be a negative one.Fifthly,to deal with the negative attainment discrepancy from a view of forward-looking with M&A,it is possible to obtain feasible results in the short-term,but it is often difficult to maintain in the long run.The improvement and recognition achieved by enterprises in the short-term through M&A is not a really long-term improvement.M&A taken for the purpose of making up for the short-term discrepancy may be a kind of "delay".In the perspective of investors,companies are expected to increase their performance in short-term by adopting M&A,an action of M&A may also show a positive signal,which makes the performce in market will get improved soon.However,in the long term,the huger size will bring the enterprise even more chanllenges of management and even higher level of aspirations,which eventually works as an opposite force,the probability,the frenquency,and the degree of involvement of taking M&A actions will be negatively related to long-term performance in stock market.This dissertation is expected to bring theoretical contributions or practical enlightenment in the following aspects:Firstly,this dissertation clarifies the importance of viewing the expected goals and expected results as the company’s decision-making basis from a view of forward-looking.Behaviroal Theory of the Firms points out that the core of corporate decision-making is to handle the discrepancy between the desired goal and the achievable level.When the discrepancy is observed,the company will adopt the corresponding problem-search actions.However,most ideas that have been fully discussed in the past research is based on the perspective of “back-ward looking”,in contrast,the attention paid to the angle of "forward-looking" is obviously insufficient.This article measures this discrepancy from a view of forward-looking,that is,the market forms a consistent forecast of the company’s end-of-year performance based on current information,minus the expected target level of its end-of-year performance based on the company’s performance in the past few years.It is the so-called the “negative attainment discrepancy from a view of forward-looking”.Linear fitting prediction is used as the company’s expected goal,and the securities analysts’ forecasts are proxy of the company’s expected output,which can be used to simulate the company’s state at the time point of decision-making.This perspective of “forward-looking” takes the changes that have occurred in the current period into consideration.This dissertation reaffirms the importance of the expectation discrepancy from a view of forward-looking to the study of corporate behavior.Even if the availability of this data is harder to collect than that of a back-ward looking perspective,it is still a direction worthy of follow-up researchers to explore.Secondly,this research re-clarifies the relationship between M&A motivation and M&A results.Risk-taking behavior has risks,and the results brought about by it can be good or bad.Therefore,risk-taking is a subjective choice,and the motivation for conducting risk-taking actions cannot be implied by the consequences oppositely.However,scholars who work the fild of M&A often mix-use the two concepts,they take the results of M&A as the purpose of a company’s M&A decision.This dissertation hopes to use the framework of Behavioral Theory of the Firm to make it clear that M&A is a risky decision,and the fundamental reason to take it is the company needs to response to the discrepancy between the target and the result.Meanwhile,although the M&A result is different from the M&A motivation,there are still connections between them and they cannot be studied separately.Examining the consequences of mergers while considering the motives of M&A after distinguish between them,it is the right way of rethinking and standardizing the relationship between the two.Thirdly,this research further expands the scope of application of Behavioral Theory of the Firm.By dividing the choice of different M&A target companies in the dimension of risk,the application of Behavioral Theory of the Firm can be expanded into the research field of specific M&A actions,which also provides inspirations for the studies of specific M&A actions.It is breakthrough of boundary for both research areas.Finally,this dissertation focuses on the role of institutional environmental factors in the Chinese context,including the “political uncertainty”,as a factor of formal institutions,and the custom of the year of “beming”,as a factor of informal institution.For researches in the Chinese context,the particularity of policy and culture is the direction that needs to be paid attention to.This dissertatrion provides theoretical support for the role of such factors and also develops the construction of related variables.In the practical level,foreign researches may have deviations when used to guide domestic practices.Research that takes domestic unique factors into consideration is of practical significance for enterprises,investors,and government organizations in the domestic reality to understand corporates’ behavior,and it may even work as a guidline of taking actions. |
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