Managerial Overconfidence, Empirical Study Of Corporate Governance And M & A Performance

The traditional economics theory established on the assumption of "rational person", it only take external management mechanism and system arrangement into consideration when it researched on the managers’ behavior and decision-making process, and ignored the influence of managers’ own psychological feature. This article was written on the base of the combination of behavioral finance’s assumptions and the enterprise managers’decision-making process, breached the limit of "rational person" assumption, supplemented the study of the M&A from managers personal behavioral perspective, and take the method of theoretical analysis and empirical research to find out the relationship among managers’ overconfidence, corporate governance and the Performance of M&A.The overconfident managers are irrational, they will overestimate the profitability of M&A project, then promote those M&A project which have bad effects on shareholders. Besides, as those overconfident managers overestimate the profitability of M&A project, they will tend to pay too much money to the target corporation and harm the interest of the company. Corporate governance strengthen the participation and supervision of stakeholders to the decision-making and implementation process and improve the performance of M&A directly on the one hand; on the other hand, through the supervision and restriction of managers’ behavior, weaken managers’ decision making authority of important items, reduce managers’ overconfidence degree and improve the performance of M&A indirectly.In order to verification the conclusion above, select times of M&A as the substitution variables of managerial overconfidence; divide corporate governance into internal governance and external governance, choose the proportion of the biggest shareholder, the proportion of independent directors and other8indicators to construct corporate governance index; select debt paying ability, development ability, profit ability and other10indicators to conduct a factor analysis, use the factor composite scores to measuring the performance of listing corporation before and after M&A. The theoretical analysis’ conclusions are validated by the empirical research.On the basis of the theoretical analysis and the empirical research, put forward the policy suggestions for listing Corporation and government supervision departments:establish an effective internal incentive mechanism; establish and perfect the internal supervision mechanism; standard the flow of managers market.