Corporate M&A And Shareholder Wealth Effects Based On Market Climate Perspective

As the capital market is not fully effective, the value of the capital market to the company's stock valuation is likely to deviate from its true value, causing the stock price to overvalue or undervalue in a period of time. Due to the influence of investor sentiment, the stock value will be consistently overestimate and the stock market will be in extremely prosperous state when the optimistic investors accounted for a dominant position, namely, over the period of market overestimation; on the contrary, most of the stock price will to be undervalued and the stock market will be in the state of depression when the pessimistic investors accounted for a dominant position, namely, over the period of a market underestimation. Nowadays, the capital market has become the era of full circulation then the market price of stock will increasingly become the unified measuring standard of shareholder wealth. Mergers and acquisitions as an important way of investment, the booming stock market or the recession market, or called the overvalued stock market or the undervalued stock market, which is likely to affect the behavior and performance of mergers and acquisition to listed companies. The existence of the mechanism has proved by theoretical deduction and empirical test in the abroad. To Chinese listed companies, which is in the economic transition and emerging market environment, is the motivation of mergers and acquisition, the payment patterns of mergers and acquisition and the economic consequences of mergers and acquisition influenced by capital market conditions?Based on the neoclassical theory of mergers and acquisition, managers hubris hypothesis and investor sentiment about the momentum of mergers and acquisition, the paper concludes the research on the motivation of mergers and acquisition, payment patterns for mergers and acquisition and shareholder wealth of M&A, combining the theory of Signal transmission theory, market timing and stock mispricing hypothesis, with the overvalued market representing the favorable market climate, then explore the behavior of mergers and acquisition, payment patterns for mergers and acquisition and the market performance of the M&A in the perspective of the market climate.Choosing 2012 to 2014 as the observation period, selecting A shares of Shanghai and Shenzhen stock market as the research sample, through the regression analysis, logistic regression and multiple linear regression, the paper draws the following conclusions: when the stock market is in overvalued period, companies tend to implement mergers and acquisitions; when the stock market is in the period of overvaluation, the patterns of mergers and acquisitions are more likely to use the payment of stock; when the company announce mergers and acquisitions during the overvalued stock market, the shareholder wealth of mergers and acquisitions before and after the announcement will increase; when the company announce mergers and acquisitions in the stock market overvaluation period, the more conducive to increase the wealth of short-term shareholders in stock payment,then the more positive market reaction to merger announcement; when the company announce mergers and acquisitions during overvalued stock market,the shareholder Wealth of the long-term will be reduced, the long-term wealth reversing is likely due to the market climate of mergers and acquisitions. This gives us a lesson that listed company should not only to consider the timing of mergers and acquisitions, the payment patterns of mergers and acquisitions and the object of M&A, but also more importantly should be cautious, not only considering the short-term stock shareholder wealth effect, but also considering the effect of long-term shareholder wealth.