Characteristics Of Managers,Accounting Conservatism And Value Creation Effect Of Cross-border Mergers And Acquisitions

Cross-border mergers and acquisitions(M&A)have become an important way for Chinese enterprises to deeply participate in the global economic collaboration,move up to the higher end of industry value chain,and implement supply-side structural reform under the background of China’s new normal economy.In the post financial crisis era,the world has witnessed a blowout of cross-border M&A conducted by Chinese companies,with number of M&A cases and volume of M&A funds reaching historic peak level.As an important way for companies to conduct global resource allocation,there are numerous risk factors in cross-border M&A,and therefore high-quality accounting information is crucial to obtain synergy effect and achieve strategic aim.Accounting conservatism,which is an important characteristic of accounting information quality and a fundamental accounting principle,requires companies’ full consideration of various potential risks and losses and a careful recognition for gains in recognizing,calculating and reporting business deals and transactions.Under the modern corporation governance system,where management rights and ownership are separate,managers are decision makers and actual implementers of companies’ strategies,and their average age,employment duration,education level and career experiences will exert a big influence on the choice of accounting policy and the performance of cross-border M&A.Based on the review of theoretical research results,this dissertation applies M&A value theory,upper echelons theory and principal-agent theory to research the relationship among managers’ characteristics,accounting conservatism and value creation effect of cross-border M&A.The dissertation analyzes cases of cross-border M&A conducted by A-share listed companies after shareholder structure reform in2007 and obtains 685 typical companies samples eventually.Based on the empirical test of cross-border M&A value creation effect and acquirers’ accounting conservatism,event study method,calendar time method,Fama-French three-factor model,C＿Score model and interaction effect model are applied to research the relationship among managers’ characteristics,accounting conservatism and cross-border M&A value creation effect from the view of property heterogeneity.Futhermore,this dissertation try to discuss the factors and mechanism which affect the value creation of cross-border M&A from a fresh perspective.The research results show that Chinese enterprises have acquired positive excess returns by cross-border M&A,achieved expected synergistic effect and led to an increase on the value of companies in general.Furthermore,market approbation of private companies is higher than that of state-owned companies.Accounting conservatism enhance the capability of cross-border M&A value creation through reducing principal-agent cost,repelling overconfidence of managers and easing financing constrains.The characteristics of managers play a noticeable role in regulating the relationship between accounting conservertism and cross-border M&A value creation effect.The regulation effect is closely related with acquirers’ nature of property right.The positive regulation effect of average age and employment duration in state-owned enterprises is more significant than that in private enterprises;by contrast,the positive regulation effect of education level and career experience is more significant in private enterprises.Based on theory analysis and empirical research conclusion,this dissertation puts forward policy suggestions on improving accounting information quality and optimizing configuration of managers in order to help Chinese enterprises grasp the opportunity of “the Belt and Road” and promote value creation ability in cross-border mergers and acquisitions to implemente the “go global” strategy successfully.