An Empirical Study On The Characteristics Of Management, Equity Incentive And Long-term Performance Of M&A

The enterprise merger and acquisition, which can optimize capital structure and promote the rapid expansion of the stock of capital, is more and more favored by enterprises. However, whether it can reach entrepreneur’s expectations or not remains unanswered in academic c ircle. Manufacturing companies, as the representative of real economy, are frequently involved in M&A events. Therefore, the study of long-term performance of M&A will be helpful and meaningful. This paper, using the characteristics of management and the equity incentive as the factors which have effect on the long-term performance of M&A, and based on the relevant data of A-share listed manufacturing companies in Shanghai and Shenzhen stock exchanges in 2010 and 2011, studies the impact of equity incentives and the characteristics of management and equity incentive on the long-term performance of M&A by employing event study method and BHAR variable.The empirical results show that:(1)First, for the A-share listed manufacturing companies, there is an “inverted U-shape” relationship between the equity incentive intens ity and BHAR variable, that is to say, when the shareholding ratio of management level is less than 11.34%, equity incentives will have a positive effect on the long-term performance M&A, while when the ratio exceeds 11.34%, equity incentives will play a negative effect on the long-term performance M&A.(2)Second, the interaction between the executives’ age and equity incentive has a positive impact on the long-term performance of M&A.(3)Third, the interaction between the percentage of women of the management and equity incentive has a positive impact on the long-term performance of M&A.(4)Fourth, the interaction between the executives’ duration and equity incentive has an insignificant effect on the long-term performance of M&A.(5)Fifth, the interaction between the executives’ educational level and equity incentive has a negative impact on the long-term performance of M&A.Finally, the following suggestions are presented:(1) the reasonable employment of equity incentive would be helpful to the long-term performance of M&A and prevent the negative effects of unreasonable employment;(2) make full use of managers with rich working experience. The rich experience of managers plays a positive role in the long-term performance M&A;(3) increase the number of women in the management. The team cohesion of female managers can promote the strategic integration after the enterprises’ mergers and acquisitions;(4) managers with higher educational level should be cautious and rational to make strategic decisions and may avoid the negative impacts caused by overconfidence.