The Research Of The Relationship Between Parent-subsidiary Common Managers And Corporate M&A

The questions of affiliated management in listed companies have been discussed by scholars.However,an interesting phenomenon,that listed companies’ top managers are often appointed as directors of subsidiaries,has been neglected.As a part of listed companies,subsidiaries always play an important role in corporate strategies.Dyreng et al.(2012)and Shroff et al.(2013)have called for more studies to explore influences of subsidiaries to operating performance.Recently,M&A transactions in China have become increasingly active.How to enhance M&A performance to make M&A transactions truly benefit listed companies has become an important issue.Based on this background,this research focuses on the influence of parent-subsidiary "common managers" on the M&A transactions.According to the past literature,this paper initially assumes that common managers may desire to enhance companies’ performance or to benefit themselves through M&A.Therefore,this paper studies the influence of manager affiliation in subsidiaries on M&A performance,and explores the reason of this influence from the managers’ motivation perspective.Firstly,using listed companies in 2009-2015 as samples,this paper studies the influence of "common managers" on M&A decisions and finds that manager affiliation in subsidiaries is positively related to M&A decisions.Furthermore,this paper examines the influence of "common managers" on M&A performance.Examining the samples in 2009-2014,this paper finds that companies with "common managers" perform better in M&A transactions.There are two possible reasons that may cause this phenomenon.From the operation efficiency perspective,"common managers" can obtain first-hand internal information of firm’s operations which can enhance M&A performance.From the motivation perspective,the managers may intentionally keep an affiliation with subsidiaries to achieve strategy goals.Therefore,"common managers" desire to enhance performance through M&A.Finally,this paper tests the influence of affiliation on the personal benefit from M&A transaction.It turns out that personal benefit of affiliation managers from M&A is lower than that of other managers.This paper draws a conclusion that affiliation managers in subsidiaries make M&A decisions for the benefit of companies,not for themselves.