An Empirical Study On The Top-Management Incentives And The Performance Of Mergers And Acquisitions Of Listed Companies

Merger and acquisition is an important means of rapid expansion for enterprises. It can improve their core competitiveness and achieve sustainable competitive advantage in the development of their major strategic decisions. Whether they can achieve the purpose after the merger has a close relationship with the behavior of their senior managers. And the company’s incentives will affect the behavior of executives decision. In the pay incentive of our country, cash incentive, position-related consumption and equity incentive are the three major components. The paper will study how these three components affect performance of the company’s M&A performance. And it is important to establish an effective manager incentive compensation system and improve corporate governance.Firstly the measure of M & A performance and results of research at home and abroad were reviewed. Taking into account China’s capital market information disclosure to be improved, using stock price changes before and after the M&A performance called event study to measure short-term performance may cause inaccurate results. This article selects accounting research methods which is based on financial indicators such as accounting information to examine the long-term performance of the acquired company. Because of its performance is a comprehensive reflection of various financial indicators, simply select a certain indicators are not conducive to a comprehensive measure of corporate performance, this paper used the factor analysis. This paper employs 647 corporations from the listed companies in China which have implemented M&A transactions from 2009 to 2010.Then we use factor analysis method to extract common factors from the original financial indicators and calculate performance scores before and after four years. We analyzed the merger performance after the long and short term, and then showed how the executive incentive affect its merger performance.The thesis found that in the year happened M&A, company performance has decreased, one year after the merger, the performance has been significantly improved. But in the second year after the merger, there was greater performance decreased, even lower than the merger level before M&A. Therefore, in the long run, M&A did not make the enterprise’s performance significantly improved. Monetary remuneration level is positively correlated with merger performance. While executives’ shareholding ratio has no significant correlation with M&A short-term performance, and has significant negative correlation with the long-term performance. The position-related consumption has a significant positive effect on performances of M&A. Job consumption can be seen as implicit control over the executive incentive. To some extent, It achieves incentive.