Under modern enterprise system, separation of proprietary rights from management rights arise questions of agency between shareholders and managers. Based on information dissymmetry and conflicts of interest, managers may encroach on the benefit of shareholders, shareholders, therefore, are inclined to set up a complete system to supervise and control that kind of activities. The core purpose of corporate governance is to solve these problems of agency. As an external mechanism, merger and acquisition (M&A) is "the last means of constraint" when internal mechanism for corporate governance is invalidated. M&A can help external managers control the target enterprise across its current management and the board so as to improve its structure of corporate governance. In the western mature capital market, M&A is an effective mechanism for restricting and punishing those internal managers with bad behavior. In China, it is also transparent that the more frequently M&A happens, the more important role the market of corporate controlling right plays in the field of corporate governance.Chinese-listed companies face the problems of corporate governance including:insider control, the weak independent of board of directors and lack protection for minority stockholders etc. And the debtors can not have great influence on corporate governance. The article analyses the characteristic of Chinese capital market at first, and choose 122 samples for empirical research based factor analysis. After that, we use Wilcoxon-Rank Test to analyses different groups. The empirical research stated that M&A can improve the corporate governance of target companies, and if the target companies changed control-nature through M&A, the results are more remarkable. |