Research On The Relationship Between Management Characteristics,Executive Compensation And M & A Performance

Driven bythe double forces of internal and external environment forces,the M&A market in our country start another boom,and enterprisemergers and acquisitions become the focus of domestic research scholars simultaneously again.In the critical period of industrial upgrading and transformation in China,the increasingly active M & A activity is an important way for enterprises to get rid of backward production capacity and realize the transformation and development.It is also the catalyst to promote China’s economy out of the predicament and stimulate the vitality of the market.But the reality shows that the performance of enterprises after the merger did not get the expected upgrade,M & A is difficult to play its due effect.More and more scholars have shifted their attention to senior managers to study the impact of their characteristics onM&A performance.However,the research in recent years is mostly about the management of self-confidence,the political background of managers and the characteristics of the population of managers,few articles consider the impact ofmanagerial ability and managerial power onM&A performance.This article argues that the different conclusion are related to their motivations,which determines that management will take a different behavior in the M & A process and have a different impact on the M & A performance,so it is necessary to carry out a comparative study betweenmanagerial ability and managerial power.This paper first summarizes the relevant literatures in the domestic and overseas,and puts forward reasonable assumptions on the basis of predecessors’ research and theoretical bedding.Then,the study choose the listed companies who have undertaken acquisitionsduring 2010-2014 as samples to explore the relationship between management characteristics and M&A performance of listedcompanies.In order to guarantee the accuracy of the results,the study use more scientific methods to calculate the key variables: the managerial ability is calculated by DEA-Tobit model;managerial power is measured by principal component analysis to build a composite indicator,which also broke the traditional measurement methods.In addition,this paper also add executive compensation factors to explore the motivation behind the behavior of the manager,and discuss the effectiveness of the salary incentive effect under different management features.Finally,the conclusions are drawn from the above analysis and empirical results:(1)It shows a significant negative correlation between management power and M&A performance;(2)There is a significant positive relationship between management ability and M&A performance;(3)Managerial power has positive correlation with explicit executive compensation,but not significantly;it has significantly positive correlation between managerial power implicit executive compensation.It means management with power have an incentive to maximize the pursuit of their own interests,and management has a strong incentive to cover up its self-interested behavior;(4)Managerial ability has a significant positive correlation with explicit executive compensation and a significant negative correlation with implicit executive compensation.It shows management with higher capacity is more able to rely on their own efforts and is more easily to get higher pay,they will not use their own personal to gain privileges.It confirmed the conclusion that the motivation of the management who own ability is consistent with the overall corporate goals;(5)It shows a significant positive correlation between cross multiply items and M&A performance.It means incentive function of executive compensation in the feature of managerial power is invalid.The negative impact on M&A performance not only has not been suppressed,but also showing a strengthening trend;(6)It shows a not significant correlation between cross multiply items and M&A performance.This suggests that the incentive function of executive compensation is not effectivein the feature of managerial ability.This study adds new management characteristics to M&A performance factorsand enriches the domestic research on managerial ability and managerial power.What is more,it can provide a useful reference information to improve the corporate governance structure,and help the company rediscover the impact of executive compensation on management behavior.