Management Overconfidence, M & A And Corporate Governance

With the constant improvement of the capital market and the development, M&A has become enterprises optimize the allocation of resources and capital operation of the main ways. But more and more scholars study found that M&A is not always can bring value-added to shareholders, instead sometimes can lead to the wealth of the enterprise loss. Behavioral financial theory researchers bold blend in psychology, behavioral science research achievements of financial research, found that managers often exist in "irrational" behavior, and puts forward the theory of overconfidence. Enterprise management decision has the remarkable influence to the enterprise, so, relative to the overconfidence in terms of management, management of overconfidence will because overestimate their own management ability and easier implementation of mergers and acquisitions? Management due to excessive self-confidence and implement its m&a performance of mergers and acquisitions? Further, if considering the corporate governance, good corporate governance mechanism can rise to protect the interests of the shareholders of a company, effective recognition and restraint managers behavior, overconfidence can reduce management level, thereby reducing managers overconfidence influence on m&a decision?This article refers to the national bureau of statistics sentiment survey results, confirmed on the macroscopic management in our country universal existence of overconfidence. Subsequently, this paper collected the Shanghai and shenzhen two city2009-2012data of listed companies, with executive pay relatively than as managers overconfidence substitution variables, research management overconfidence, corporate mergers and acquisitions and the relationship between the corporate governance. Study found that managers overconfidence degree is higher, the greater the chance of the implementation of merger and acquisition activity. When overconfidence of management in the implementation of merger and acquisition activity, because easy to overestimate their own capabilities, overestimate the value of the target company and a series of reasons cause inefficient m&a, poor performance of m&a performance.Management overconfidence in essence is a kind of behavior management, good corporate governance mechanism can effective constraint the behaviors? Further, this article from the committee set up status and shareholders consider corporate governance checks and balances two dimensions, the study found that good corporate governance can restrain managers overconfidence influence on merger and acquisition activity, but not effective constraint management because of the negative effects of overconfidence on m&a performance.