Executive Political Promotion Drives Mergers And Acquisitions

M&A motivation theory has always been a continuously explore matter of academic circles at home and abroad, scholars research on the issue has been achieved very fruitful results. Existing theory analyses the M&A motivation from different angles, provide an important basis for the correct understanding of enterprise M&A motivation. But most of these theories is only applicable to the enterprise M&A behavior of western under ideal conditions, can not fully explain China's institutional environment escalating wave of mergers and acquisitions. This paper will be from a new perspective of political promotion,and merger and acquisition of state-owned enterprises in the perspective of executive compensation change, as the M&A motivation to explore the analysis of the impact on the M&A behavior, expand and enrich the existing M&A motivation of study, as the research under the system of the government's influence on the microscopic economic activities provides a certain reference significance.To this end, this paper adopts theoretical analysis and the empirical research method of combining; first defined the concept of executive's political promotion, then summarized at home and abroad on the executives' implicit incentives and executive political promotion pay dominant incentive effects on enterprise long-term M&A performance. Finally, this article applies the method of empirical research, in 2008 ~ 2010 in China's stock markets of Shanghai and Shenzhen for the first time the state holding listed company merger and acquisition of M&A events as the research sample, adopt BHAR as long-term M&A performance measures, examine the executives private benefits(political promotion, salary incentive) for our country the influence of the state holding listed company M&A performance for a long time, but also analyzes the enterprise growth variables impact on the state holding listed company merger and acquisition performance over a long period of time. Through the study found that executives political promotion is not significant effect for our country state-owned listed companies of M&A performance,this paper argues that it is likely to be state-owned enterprises the transformation of political promotion mechanism and results of executive term limits. Preliminary research results confirmed that the compensation change can significantly improve the stateholding listed companies the hypothesis that long-term performance of M&A; Further study found that when executives are nearing retirement, have stronger motivation form through mergers and acquisitions to increase their pay. In this paper, the study found that at the same time, the enterprise the past performance and long-term M&A performance is significantly negative correlation, indicating that when enterprise performance is bad,executives can through the form of mergers and acquisitions to improve the performance of the enterprise. This in part how executives will be achieved through mergers and acquisitions means hide enterprise past bad business performance of opportunism. Finally,in this paper, the results showed that the enterprise growth and long-term M&A performance is significantly related to the enterprise's growth, the better, the enterprise long-term M&A performance, the better.