Study On Company M&A Based On Behavioral Corporate Finance

Merger and acquisition (M&A) is one of the important forms of capital collocation, and also an important measure of realizing capital element circulation and adjustment of industry structure. Moreover, the M&A behavior between listed companies is also an effective means by which they form external governance effectively. However, M&A activities are always affected by the irrational behavior of investors and administrators'own. This paper has three main parts. Of the first part are chapters 2 and 3, in these two chapters, after introducing the theory of behavioral corporate finance in detail, we appraised and expanded the theory model when introducing it, and we also achieved much from way of theoretical and applied studies. Of the following part are chapters 4 and 5. In this part, combining the M&A practice of our listed companies, we tested the effects brought from mispricing the market value of listed companies. At the same time, it revealed that managers were excessively confident of corporate M&A expansion. In our part of empirical study, the results show: the ratio of market value to book value has obviously effect to company's takeover, and it has no significant effect to the behavior of listed company buying recombination. It's very different that the effect of market value on M&A according to whether acquiring corporations are listed companies or not. The degree of targets, which is acquired by listed companies, market value deviating from the basic value is higher than that of targets, which is acquired by unlisted companies. Meanwhile, we found many other factors that affect corporate M&A behavior too in our empirical study. In chapter 5, we research the example of corporate M&A activities, in the view of manager's overconfidence. And we choose Xinjiang Delong Com. as our example. The analysis indicates: Delong presented a series of financial characteristics, financing and market reaction characteristics in its process of M&A expansion, theses evidence is broadly supportive of the manager's overconfidence hypothesis. The manager's overconfidence drives the corporate M&A. Because of weak supervision of our corporate law, Delong's fast expansion is induced by short-time benefit from many parties. The expansion is accelerated and done to destroy. The third part of this paper includes chapter 6. In this chapter, based on summarizing the empirical study conclusions of the second part, we give some policy proposals of how to consummate the supervision of stock market of our country. Moreover, we point out our shortage and the way for further study.