Research On Accounting Rent-seeking In Consolidation By Merger

Merger is an important form of capital operation and a common ways of a business combination. After the absorption of the merger, legal personality of the merger parties or the absorbed merging parties is canceled, the two companies merged into one company. Merger has many advantages, for non-listed companies, merger can make the one become a listed company and achieve a rapid flow of equity value through the "shell" resources, and it also can reduce the normal listing process time and uncertainty; For listed companies, the merger can quickly achieve enterprise-scale expansion and integration of resources, and this kind of merge have much amplification effect in the secondary market, various stakeholders can obtain significant economic benefits through it, So merger is widely adopted in the capital markets.To avoid the huge cash pressure, convertible merger is usually adopted in the inter-firm merger, so the process inevitably involves the determination of exchange ratio. The determination of exchange ratio,value evaluation date and enterprise value evaluation consist of the three main tools of the manager's accounting rent-seeking. Because of the great uncertainty and flexibility in the three main tools, merger is usually treated as a good chance to transfer interests in a non-productive way by the internal and external stakeholders. In economics, In order to seek the transfer of interests in a non-productive way at the cost of social resources consumption is called rent-seeking, when the stakeholder's this kind of behaviors involve accounting methods, the accounting rent-seeking then appearance. To transfer interests in a non-productive way is always a negative-sum game in accounting rent-seeking, it caused great hazards to the society as a whole.This paper introduces the relevant theory of rent-seeking and business combinations at first, and find out the inner relations between accounting rent-seeking and business combinations then; Later, this paper find out the key participants, primary means and other participants of accounting rent-seeking in merger from the basis of economic theory and accounting theory; After it, the author use three game models show the game relationship between manager and investors, certified public accountants, and regulators, In addition, the author also analysis the conditions of game equilibrium and affecting factors between them. Follow the game models, the author use the merger case of ST ChangYun absorbed the Southwest Securities to further illustrates the accounting rent-seeking in merger: the two parties though the methods of business valuation obviously underestimate the value of Southwest Securities, while the value of ST ChangYun is significantly overestimate, as a result, the interest that should belong to the shareholders of Southwest Securities are transfer to the shareholders of ST ChangYun. In the end, the author get the suggestions to reduce rent-seeking in merger and give the shortcomings of the papers.