Empirical Research On The Impact Of Managerial Overconfidence On The Mergers And Acquisitions Decision-making And Performance

M&A has become an important means of listed companies to expand company size andintegrate the company structure, and many scholars explore M&A as the hot spots. In theprocess of the implementation of mergers and acquisitions in the company, it will encounterlarge and small, a variety of factors influence. From the perspective of behavioral finance, it isbelieved the managers in the implementation process of mergers and acquisitions are notentirely rational, and managers will be overconfidence phenomenon under the influence of anumber of factors. Like this, managers overestimate the value of the company, andunderestimated the risks, and affect the company’s decision-making and performance of M&Ain the process of mergers and acquisitions.It is based on elaborating the theory about the company’s M&A motivation andbehavioral finance and so on, and it is an empirical analysis in two ways in this paper. On theone hand, it is the study of the impact of managerial overconfidence in M&Adecision-making process. This paper selects the sample data from2010to2013, and whetherthe merger occurred is used as a dependent variable, managerial overconfidence is used as anexplanatory variable, and it selected assets and liabilities and other control variables. Andusing descriptive statistics, correlation analysis and logistic regression analysis methodsanalyzes sample data, and it has a conclusion at last. On the other hand, it is the study ofmanagerial overconfidence relationship with the company’s M&A performance. This partselects EPS which is used as an alternative measure of corporate performance variables, thedifference between EPS for two years is used as a dependent variable, and managerialoverconfidence is used as an explanatory variable, and proportion of independent directors andother variables are used as the control variables. And using descriptive statistics and multipleregression analysis methods analyzes sample data.After empirical research and analysis, it got two conclusions: first, ManagerialOverconfidence and M&A decision-making is a positive correlation relationship, second,managerial overconfidence and M&A performance is a negative correlation relationship.These two conclusions illustrate that managerial overconfidence not only affects thecompany’s M&A decision-making, but also affects the company’s M&A performance. So, companies should pay attention to managerial overconfidence effect on M&A activity, andenhance the success rate of M&A activity.