The Effect Of Reference Point Prices On Mergers And Acquisitions

Since the late19th century early20th century the first M&A wave in the United States, Mergers and acquisitions have become more and more frequent. Especially since the1990s, with the speeding up of the global economic integration and the rapid rise of the new economy, existing economic landscape will be broken, triggered a new wave of mergers and acquisitions, known as the fifth wave of mergers and acquisitions. In this paper, the research from the market background of our country, development is relatively backward in our country’s emerging capital market, although all aspects are progress and perfect, always with some of its shortage of factors, these factors make the western theory is not entirely suitable for the actual situation of our country market, to the problem of listed company merger and acquisition analysis also is such. Only by using the theory of western mergers and acquisitions mergers and acquisitions in China price formation of the explanatory power is not strong, the reason is that:in the past under the highly centralized economy, there are still traces of the public sector of the economy; equity structure.In terms of decision making, often intervented by the government or the competent department in charge of too much.Equity concentration in our country, the lack of strict supervision of legal system, contract transfer is the primary means of trading, the stock market speculation and for a long time connection transaction, thus, the interference of marketization of mergers and acquisitions suffered much interference, above the background factors, in the previous paper about the value of mergers and acquisitions, has not completely, they are the basis of a more western price earnings control theory in the theory.Therefore, I begin from the actual situation of our country listed company merger and acquisition, from the perspective of M&A price reference effect study M&A price, hoping to enrich research on trading prices of listed companies.This article bases on mergers and acquisitions of listed companies in2003-2013 of our country as samples for empirical testing, try to study the influence of peak of shares of the target company to the transaction price.In this paper, the research results show that:(1) the market price of the target company is anchoring effect.Specifically, the target company for a period of time before M&A price spike has a positive correlation effect on M&A price.Whether high reference value or low will impact on the market price has certain reference value.Because the estimate of the actual value of a company is a complicated process, so the managers tend to find a reference point as anchor values on the value of the company have a psychological expectations, the actual transaction price will fluctuate around the anchor value;(2) as the distance of share price peak time is further from the trade time, anchoring effect is weaker, the influence of the transaction price to managers is weaker.Due to the longer the distance trading time, the company changed more, the company board and management changes, for example, the CEO’s change, the changing of the corporate strategy factors such as the company’s value will have different degrees of influence, so the long time distance of the price spike anchoring effect is weak.(3) the company’s corporate governance index reflects the level of corporate governance is good or bad.When good corporate governance, the reference effect for the price spike is stronger;When the poor corporate governance, the reference effect for the price spike is weaker.In consideration of the shareholders and management of the target company to protect their own interests, at the time of selling the company equity then are more willing to ask a high price as anchor values to evaluate the actual value of the company. Therefore price spike as an obvious price, and the price become the valuation of an anchor value.This article based on the share price peak as a reference point for research, break through the traditional theory of control theory.Based on market situation in China, with the perspective of price spike as a reference point for market price and get some theoretically and practically valuable theory.For the current study about the value of mergers and acquisitions is a beneficial supplement.Both theoretical and corporate level has great reference value for enterprise level.Further research on the transaction price can be through other reference value to research the influence of the transaction price.Anchoring effect for psychological research is a new field of research on M&A price.Through the study of psychological factors impact on market price has great value, is also recognized by the industry of an area.