Stock Market Valuation, Management: An Empirical Study Of Relationship Between Overconfidence And M&a Performance

M&A is one if the important forms of capital collocation, and also an important measure of realizing capital element circulation and adjustment of industry structure. Domestic and international theoretical and empirical studies have shown that M&A activities are always affected by the security market and behavior of corporate managers. This research on the basis of the results of scholars from home and abroad,explore the relationship among the level of market valuation, manager overconfidence and the performance of mergers and acquisitions from the valuation of China’s capital market and manager decision behavior.This research depends on the446listed companies from Shanghai and Shenzhen Stock Exchange occurred673M&A events between2001-2009as the study sample, Using the event study and accounting research methods to measure short-term market response and long-term performance, based on the two hypotheses of M&A performance(manager overconfidence and Stock market driven acquisitions theory), established the assumptions of this study, make an empirical test for overconfidence of managers, the stock market valuation and their interaction with the relationship between the performance of M&A, The specific conclusions are as follows:(1) Stock Market valuation is an important driver of M&A activity of company, compare to the low valuation period, in the over-valuation period, more M&A events take place. Stock market valuation and M&A performance was significantly related, compare to the low valuation period, The acquirers buying during high-valuation markets have significantly higher announcement returns but lower operating performance than those buying during low-valuation markets. Managerial Overconfidence and acquisition performance was significantly negatively correlated. Proportion of independent directors and M&A Performance was a positive correlation. Independent directors the higher, the better performance of mergers and acquisitions. This indicates the independent director system of listed companies on the inhibition of overconfidence behavior have a positive effect.(3) From the regression results of the interaction of the stock market valuation and manager overconfidence, on the overvaluation period, rational managers of the acquiring party will get a better market response. On the Low valuation period, rational managers of the acquiring party will get a better long-term operating performance better. Split share structure reform is to achieve have a positive impact on the quality of M&A. The free cash flow and ROE have a positive impact on the quality of M&A.