A Study On The Influence Of Media Reports On M&A Premium

In recent years,facing the requirements of economic development and supply-side structural reform,M&A has become an important way for Chinese enterprises to integrate capital and technological resources and rapidly enhance their competitiveness.Since 2015,M&A has seen an explosive growth.With the increase of the number and amount of M&A,M&A activities with high valuation and high premium have attracted extensive attention from investors.The information asymmetry between the two sides is one of the main reasons for the M&A premium,while the media have played an important role of passing information.The acquired party has an incentive to collude with the media to obtain higher M&A premium.This paper mainly studied the influence of media reports on the M&A premium.Based on the M&A events of Shanghai and Shenzhen A-share listed companies from 1998 to 2017,this paper selects the M&A data and news data of the acquired party,and draws the following conclusions.First,in M&A,the more media coverage of the acquired parties,the higher the M&A premium is,and positive media coverage can significantly increase the M&A premium.Instead of supervising the excessive M&A premium,media reports promote it by passing on specific information.Second,after distinguishing the enterprise type of the acquired party,it is found that in M&A,when the acquired party is an asset-light enterprise,media reports can increase the M&A premium.When the acquirer is an asset-heavy company,media reports cannot increase the M&A premium.Asset-light enterprises have the characteristics of high M&A premium,high subjectivity of M&A target and difficult to be supervised.So their M&A price are more susceptible to the influence of media.However,we can completely and objectively evaluate the enterprise value of asset-heavy enterprises through the financial statements,so it is difficult to be affected by media reports.Thirdly,further research shows that in M&A,the acquired party obtains more media coverage,especially positive media coverage,through a large amount of advertising expenditure.The empirical results show that the acquirer colludes with the media.The acquirer pays the advertising fee to bribe the media and colludes with the media to gain a more positive corporate image,thus driving up the M&A premium and gaining additional benefits.Based on the above research results,this paper puts forward the policy suggestions of formulating the evaluation standards of the underlying assets industry and strictly regulating the reporting quality of the media industry.Only by strictly controlling the upper limit of the M&A premium rate and the quality of media reports can the M&A with high valuation and high premium be effectively restrained and the smooth operation of the capital market be maintained.