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.At the first of the paper, we introduced the basic conceptions, behavioral finance and the behavioral corporate finance in detail. Then we appraised and expanded the theory model.Then combining the M&A practice of our listed companies, we tested the effects brought from mispricing the market value of listed companies. The results show: the ratio of market value to book value has obviously effect to company's takeover. The degree of targets, which is acquired by listed companies, market value deviating from the basic value is lower than the bidders. Meanwhile, we found many other factors that affect corporate M&A behavior too in our empirical study.At last, we research the corporate M&A activities, in the view of manager's over confidence. The results show: managers were excessively confident of corporate M&A expansion. Using past (excess) market return as a proxy for the likelihood of hubris, we find that high hubris bidders frequently have negative event period abnormal returns, while low hubris bidders have higher event period abnormal returns. M&A lead to decrease the shareholder's wealth of acquiring company. These results are 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, company's fast expansion is induced by short-time benefit from many parties. The expansion is accelerated and done to destroy.At the end of the paper, 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.