The Empirical Research On Overseas M&A Premium’s Influencing Factors Of Chinese Listed Company

As well as promoting of the sustainable development of economic globalization,and influencing of the China’s national economy "going out" strategy, more and moreChinese enterprises to join the wave of overseas acquisitions. But with the scale ofChinese enterprises overseas mergers and acquisitions growing, the "China premium"phenomenon amazing. In order to achieve the goal of a successful bid, Chineseenterprises, especially state-owned enterprises in the transaction, the quoted price ismuch higher than the normal level of the target company’s market value. It is worthnoting that the high premium does not guarantee the success of overseas acquisitions.The plan of Chinalco injects Rio Tinto abortion, Sichuan Tengzhong acquires USHummer defeat, CNOOC was forced to withdraw from the acquisition of Unocal,CNPC actually purchases Gorgon failed…The tragic case of these failures can beproved it well. So Why Chinese companies are willing to pay high premium inoverseas acquisition? What are the influence factors of China’s enterprises overseas M&Apremiums?This article as it a starting point, and put the M&A premium issues into China’soverseasM&Aenvironment,characterized by the new round of M&A wave caused bythe financial crisis from2008to2013.Tnen hand-selected54successful overseas M&A Chinese listed companies as samples, and based on free cash flow hypothesis,arrogant management hypothesis,the theory of asymmetric information,internationalbusiness operations stage theory to select relevant variables, then recent and modelbuilding.Finally, using SPSS17.0statistical software,through descriptive analysis,correlation analysis, col-linearity test, regression analysis and robustness test to arrivethe relationship between information asymmetry between the two sides enterprises,enterprise free cash flow, management arrogance, the degree of internationalizationand overseas m&a premium rate. Based on empirical analysis above, we draw thefollowing conclusions:(1) acquisition information asymmetry between the two sideswill lead to premium pay in the process of companies overseas M&A;(2) thecompany’s free cash flow can magnify the extent of overseas M&A premium;(3) thecompany management’s overconfidence can expand acquisition premium degree tosome extent;(4) the company’s degree of internationalization can effectively inhibitthe Overseas M&A premium level. Finally, according to the empirical results, the paper argues that four aspects relevant policy recommendations can be implemented:the securities act due diligence,improve cash dividend distribution system, establish ascientific and rational decision-making mechanisms and procedures, encouragetechnology exports.