The Impact Of Stock Market Mispricing On Chinese Listed Companies Mergers And Acquisitions

The motivation of companies make mergers and acquisitions is very complicated,stock mispricing may drive M&A. Foreign studies show that market mispricing can explain the company's M&A better. Chinese stock market has stepped into full circulation era, pricing function of the capital market had gradually strengthened, but whether market mispricing can drive M&A or not needs to be studied. This paper starts from the market mispricing theory, fully considers the institutional factors,policy background and market environment of China, and analyzes the applicability of this theory in China M&A marke. Then to study the the driving effect market mispricing has on the company mergers and acquisitions by using the empirical model,and to test the how the stock overvalued affects the payment of M&A.This paper based on the theoretical analysis, and put forward research hypothesis,selected sample data of M&A events from 2007 to 2014 in Shanghai and Shenzhen stock market, through constructed the Logit model to study the effect of market mispricing to company's M&A. The empirical results show that:(1) the market mispricing has driving effect on the company's M&A, the higher level of the company's stock price being overvalued, the more likely they are inclined to make mergers and acquisitions, and more likely to choose to pay in stock.(2) when the stock overvalued degree is low, compared with state-owned enterprises, non-state firms are more likely to make mergers and acquisitions, because the decision state-owned enterprises make about M&A will be influenced by government's, but as the stock price rises, the possibility for state-owned enterprises implement mergers and acquisitions is higher than non-state enterprises, and more likely to choose to pay in stock than the non-state-owned enterprises.(3) when the stock market is overvalued, companies are more inclined to make mergers and acquisitions.