| With the deepening of economic globalization,traditional capital accumulation has been unable to meet the expansion needs of enterprises,thus more and more enterprises look forward to quickly possessing the market,achieving economies of scale,improving business conditions,doing industry consolidation,enhancing competitiveness and many other aspirations through mergers and acquisitions(M&A).However,in the real M&A activities,which acquirers facing is low performance problems after M&A and it can not be ignored,this paper attempts to explore what causes this problem.From the perspective of traditional economics,there are principal-agent cost theory,information economics theory,signal transfer theory can be explained.And from the point of view of behavioral finance,there is the theory of manager’s overconfidence.There are many factors that lead to the poor performance of acquirers after M&A,however,this paper is more consistent with the manager’s over-confidence.Because many of the current research shows that many managers make extreme financing decisions even if the enterprise is in a high financial risk,and may make a large number of debt so that financial leverage will out of balance,this phenomenon is contradictory to the traditional rational human hypothesis.The theory of managerial overconfidence is based on managerial irrationality.The theory hold that managers conduct M&A because of overconfidence,so they tend to overestimate earnings and underestimate risks when assessing M&A opportunities.As a result,M&A companies bid too high on the target companies,causing excessive acquisition costs.Or manager of acquiring company may overestimated its ability to integrate resources,thus leading acquiring company into the integration dilemma,and ultimately acquiring company did not benefit from M&A transactions.This paper based on the theory of principal-agent cost,information economics,signal transmission theory and manager’s overconfidence theory,chooses listed companies in Chinese A-share market as the research objects from 2007 to 2014.This paper studies the value of acquiring company after M&A by means of event research.The cumulative abnormal returns are obtained from the CAPM model and the FF three-factor model which are used to represent the short and long-term performance of M&A,and the proxy variables of the relevant theories are tested in multiple regression models.The results show that the theory of managerial overconfidence has stronger explanatory power than the principal-agent cost theory and information economics theory.The more overconfident of manager,the worse of performance after M&A activity;the more overconfident of manager,the stronger the negative effect of cash payment on M&A performance;cash payment will increase the negative effect of manager’s overconfidence on acquirers’ performance;under the condition of low information asymmetry between the acquired company and acquiring company,managers who are overconfident will give positive effect on the performance of company.It has some theoretical and practical significance to use the theory of managerial overconfidence to explain the inefficiency of M&A in our country.It can complement and perfect the M&A decision-making research,and provide some empirical conclusions for our theoretical circles and supervisory departments.Promote managers in the M&A to examine whether there is irrational behavior or not,so as to avoid over-confidence affect the performance of acquiring company.And help to put forward effective policy suggestions for the relevant departments of the state that can limit the excessive over-confidence behavior of managers,help promote the rational development of listed companies,and avoid the occurrence of low-performance M&A activities,eventually improving the efficiency of social resource allocation.In addition,this paper do the M&A research starting from the stock price effect,it can provide the reference for the majority of Chinese investors. |
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