The Motivation Of M&A:Value-enhancement Vs. Self-interest?

Recently, there appears many M&A actions among different corporations whether the corporations are big or small. But the performance after acquisition is not satisfied. It has been known that the CEOs or the directors should be responsible for the value enhancement of the corporation. Therefore it is going to discuss the motivation of the leader in one corporation to find out the exact aim to have an acquisition action. It may lead us to uncover the reason to the failure of one acquisition. Here is going to explore the main objective of CEOs through the directors’stock holding change (increase or decrease). The motivation has been classified into two categories which are value enhancement and self-interest. The stock holding changes are put into this framework which may make some creations in this field.The research methods in this article are literature research and statistical analysis. In this paper, sample we select includes the Shanghai stock exchange and shenzhen stock exchanges of all listed companies from 2004-2012 in CSMAR data source (the taian) database and the empirical analysis software is Eviews 6.0. Through the analysis of the database, this study found out that enterprise M&A and the motivation of corporate executives have a certain correlation. The behavior of CEOs tends to throw out their holdings of stocks. It also suggests that the existence of CEO’s private profit motivation. Enterprise with the motivation of M&A is not necessarily pursuing the enterprise value enhancement. A large number of facts also verify that most of the enterprises after merger and acquisition cannot get the result of the value-enhancement. On the contrary, they are more likely to produce lower corporate performance. Enterprise mergers and acquisitions will lower the corporate performance. The reasons for the above phenomenon are likely to be as a result of the existence of corporate executives’private gains motivation. Executives also demonstrate the private benefits and do have a certain correlation between the acquisition processes. The usage of adjustment variables found that executive power is significantly influenced the motivations of mergers and acquisitions and mergers and acquisitions, which cleared out the corporate governance mechanism of the impact of low significance. Power executives are more likely to be larger by using’ his power to get CEO’s wanted issues.In this paper, there is going to put private-interest and value-enhancement together into one framework. As current research has only put one aspect into the objective of research, which restricted the development in the research of objective of merger and acquisition, the writer is going to put them together and use the stock-holding amount as the standards of measuring the aim of CEO. Nowadays, using stock-holding to be a measurement is scarce therefore it is a little creative thinking in this paper. The third point is that the essay introduces two regulated variables which are respectively executive power and corporate governance. That will make some suggestion for the on-going research.