Study On The Impact Relationship Between Corporate Governance And M&A For Target Company

The institutional barriers of equity division had been removed after the split share reform, and China's stock market had entered a new period of full circulation. In this new period, all shareholders of the listed companies have the same basis of common interest. Therefore, corporate governance structure has been enhanced. The pricing function of capital market has been corrected. The costs of M&A in the secondary market have been significantly reduced, and the real value of M&A of listed companies has been reflected in the price field, thus, M&A is developing toward the depth and width. As the external mechanism of corporate governance, the governance effect of M&A has been guaranteed systematically.This paper focused on the impact relationship between corporate governance and M&A, its purpose is to study whether M&A has the same governance effect in China's emerging market as mature capital market, and how the features of corporate governance affect the possibility of being M&A Target Company. This paper analyzed the impact relationship between corporate governance and M&A theoretically at first. Theoretical analysis showed that M&A can reduce agency cost and enhance corporate governance structure by control market, and features of corporate governance such as ownership structure, ownership concentration, and board governance have different effects on M&A. On one hand, in the study of the influence of M&A on corporate governance, this paper first compared the governance indicators of the year before M&A year, the M&A year, and the year after M&A year, and then this paper did principal component analysis to integrate all the governance indicators. On the other hand, combined with factor analysis and logistic regression, this paper did an empirical study on the influence of corporate governance on M&A.This paper found out follow conclusions: there is no significant difference in corporate governance among the three years of the sample companies, that means M&A has no governance effect, which is in accord with the character of low M&A marketization in China; the companies with a poor performance have greater possibility of being M&A target companies; the right of control is more likely to be transferred if the largest proportion of shareholding is low or the company is not state-owned; there is greater possibility of being M&A target companies both in the companies with poor information disclosure or poor manager governance. In the above mentioned factors which affect the companies to become M&A target companies, the importance arranged in descending sequence is corporate performance, ownership structure, information disclosure and manager governance.