Why Are Entrepreneurs Abandoning The "Adopted Child" In A Long-distance Merger

Mergers and acquisitions are hailed as the engine of corporate growth,it is also an important corporate governance mechanism.Especially when there is a management advantage of the party's ability to manage the lower side of the party,the management of synergies will help to improve the efficiency of enterprise management objectively,thereby improving enterprise management and enhancing corporate value.However,in China's capital market mergers and acquisitions cases,many of the listed companies after the merger and acquisition did not appear to enhance the efficiency of management,but the phenomenon of "drumming",namely the controlling equity of listed companies are repeatedly transfered(Li Chunling,2004).Existing literature mainly from the perspective of the big shareholder control private benefits that agency problem between large shareholders and minority shareholders make big shareholders did not hold listed companies for a long time,instead of a speculative behavior.However,there are also studies show that the founders of listed companies tend to have a better reputation,strong business capacity,and the agency costs of listed companies under their control will be lower.However,under the control of the founder of the listed companiesthe the phenomenon is still relatively common,especially the listed companies under the control of the founders of the private family enterprises in China.This also raised the core issue of this article:Why the founders of entrepreneurial identity did not take advantage of existing management merger integration of listed companies under the ofif-site mergers and acquisitions,but choose to sell the listed companies after years of mergers and acquisitions?This paper defines the founding entrepreneur as a rational economic person,compares the integration cost and profit after the acquisition,and the sale proceeds from the sale of listed companies.This paper argues that in the context of China's special system,it is difficult to construct social capital in different places,which causes the cost of merger and acquisition integration to be very high and the integration efficiency is difficult to embody.At the same time,in the case of imperfect capital market in China,the entrepreneur can cater for the market demandand use the concept stock to promote the company's share price in the short term,thus realizing the high yield of control sale.Among them,the main reason for the high integration cost of long-distance m&a is that:(1)the restriction of local government resources allocation after the acquisition of different places leads to the high cost of constructing social capital in different places;(2)after mergers and acquisitions both mergers and acquisitions management model and business philosophy of"acclimatized" led to higher management costs.This paper takes Zheng yonggang's long-distance m&a as a case study,analyze why he did not like to treat "parent-child" company(Shanshan)as long-term business holding "adopted son"(Zhongke Yinghua),but in the acquisition of 15 years make a choice of overall selling zhongke yinghua,to abandon the "adopted" behavior.The study of this paper shows that the influence mechanism of off-site mergers and acquisitions on the social capital of the entrepreneur is the root cause of the abandonment of "adopted son" behavior besides the influence of congenital factors of family social emotion.When the cost of off-site mergers integration is higher than that of abandoning "adopted son",entrepreneurs tend to choose to abandon the "adopted son" based on profit driven.The theoretical significance of this paper is that the synergy effect of mergers and acquisitions depends not only on the difference of management ability of the two sides,but also on the cost of integration and integration.When the merger and acquisition costs are too high and the proceeds are optimistic,the incentive for entrepreneurs to hold publicly listed companies will be severely weakened or even eliminated.The practical significance of this paper is:The practical significance of this paper is:(1)to attract the attention of the relevant parties of the government and to carry out institutional reform as soon as possible to reduce the integration cost of the acquisition in different places;(2)standardize information disclosure of listed companies,strengthen investors' education,and reduce the speculation of large shareholders' use of the concept stock to obtain profits.