Research On The Influence Of The Management Overconfidence On The M＆A Performance In Lian Tronics

With the improvement of China’s capital market operation mechanism,mergers and acquisitions have become an important means of capital operation of listed companies.Traditional research believes that M&A is an act initiated to increase corporate value,and is a synergistic effect that the acquirer hopes to achieve value increase by acquiring technology,resources,and market position.However,cognitive psychology believes that the M&A behavior of listed companies is largely influenced by the psychological characteristics of decision makers.Overconfidence is a common psychological feature of human beings.Compared with the average person,it controls more resources and organizes.More senior corporate managers are more inclined to overconfident,tend to underestimate corporate risk and overestimate the company’s future performance.This article taking Lian Tronics as an example,mainly to identify the recognition of overconfidence behavior of Lian Tronics managers;the mechanism of the overconfident psychological characteristics of managers on the M&A performance of managers;the correlation between managers’ self-confidence and M&A performance Quantitative analysis of the impact of managerial overconfidence on M&A performance.The study found that 24 M&A events in five years,4.6 billion goodwill recognition,795 million goodwill impairment and large internal remuneration gaps among executives indicate that the management of Lian Tronics is overconfident in the M&A decision-making process;Then,Degree of Grey finds out a strong correlation between managerial overconfid ence and performance of M&A.Lastly,the results of quantification research about overconfidence effect indicates that year-on-year increase in net profit Lian Tronics was greater than zero,the loss caused by overconfidence was reduced from 181 million to profit of 31 million from 2014 to 2016;when the year-on-year growth in net profit was less than zero,the loss caused by overconfidence changed from the initial profit of 0.31 billion to a loss of 0.35 million.Therefore,the overconfidence effect has a negative relationship with the change in the incremental profit of the joint construction photoelectric.The research of this paper contributes to recognition of managers’ overconfidence behavior and enriches the literature on overconfidence and M&A.Besides,it has certain reference value for the supervision department and investors’ decision-making.