The Effect Of Managerial Overconfidence、M&A Type On The Company’s Merger Performance

In today’s market economy conditions, enterprises in order to get a good development, mainly through two ways:one is to rely on internal accumulation; Another way is to expand outwards, ie mergers and acquisitions. The mergers and acquisitions business is undoubtedly an effective way for enterprises to grow by leaps and bounds and even provides a geometric growth. Since the late19th century, the world has experienced six times within the mergers and acquisitions wave, each wave of mergers and acquisitions have a great impact on the structure and the size of the enterprise, and deeply influenced the direction of the world economy. In recent years, the M&A activity in Chinese market is also in full swing. Why do companies tend to implement mergers and acquisitions do? This is because through mergers and acquisitions, companies not only to expand the operation scale, increase market share, enhance their visibility, but also to obtain sufficient and inexpensive raw materials, reduce costs, obtain advanced production technology. However, after a long study some scholars actually found, there are some companies after the merger, did not achieve the benefits above, but even worse in economic interests.What is the causes of the post-merger corporate performance is not satisfactory then? Scholars have launched a series of studies and found that there are many factors that affect the performance of M&A, M&A type is one important factor. Of course the above studies, scholars are based on the assumption of rational economic man carried out, in recent years many sociologists became interested in economic activities, they are study economic activity in a unique way.Sociologists observed economic phenomenon from a behavioral perspective, they act from the perspective of the company manager in the study of M&A investment activity, found that managers often irrational, forming a theory of overconfidence. Domestic and foreign researchers found that managers in the acquisition process, often because of their unique management position and previous management experience to produce superior to ordinary people’s ideas, this will cause them to blindly arrogant, overconfident, which make acquisition decisions is very negative, and the post-merger performance can not be achieved the desired objectives.This thesis select M&A events of2008-2010A-share listed companies in Shanghai and Shenzhen for the study sample, the proportion of executive compensation method used to measure managerial overconfidence, and uses accounting method to study the M&A performance indicator, this thesis selected net ROA and Tobin Q to measure post-merger performance. Also this article examines the different types of M&A performance impact, while the total sample were grouped according to type of merger, to test different types of overconfidence how to affect the M&A performance.This paper consists of seven parts, the first part is an introduction. The first part of this paper is to describe the performance of M&A-related background and significance; followed by a brief article about research ideas and the main content frame; finally summarizes the major innovations compared to other M&A performance study.The second part is a literature review. Systematic review of theoretical and empirical scholars findings, detailed literature review and summarized, and further pointed out that the next step in research on M&A performance orientation. The third part is the theoretical basis of this study. This section first defines the concepts covered in this article, then this study presents the corresponding theoretical foundation. The fourth part is the theoretical analysis and research hypothesis. The theoretical analysis on how managerial overconfidence, type of M&A affect the acquisition performance respectively, this hypothesis is proposed to pave the way. The fifth part is research design. This section is to specify the sample selection, the definition of each variable, which build multivariate regression models of managerial overconfidence, the type of M&A on acquisition performance and tested. Part VI is empirical test results and analysis, regression analysing the three hypothetical models, and by replacing the variables measured on overconfidence to do robustness tests.In the final part, we make a summary of the conclusions of this paper, presented to the company’s policy recommendations, we concluded that the limitations in the research process and the prospects for future research.Thesis concluded the following conclusions:(1) Overconfident managers easily lead to M&A performance declined in M&A activity.(2) In this paper, using the financial indicators one year after the merger’s to measure the performance of M&A,finding related M&A performance is superior to non-related mergers and acquisitions.(3) The total sample will be divided into relevant groups and non-related groups in accordance with the M&A type,which found that managerial overconfidence on the impact of non-related performance is greater than the relevant merger performance.