The Relationship Of Manager's Overconfidence Internal Control Effectiveness And M&A Performance

The study of M&A activity in the past is based on the premise of rational person hypothesis,but ignores the impact of the manager's own psychological and other personal characteristics.Behavioral finance is based on irrational human hypothesis,from human behavior and psychological factors,to study its impact on financial markets and related activities.In the decision of the enterprises' M&A,the manager's overconfidence is often closely related to the excessive investment.And the overconfident managers tend to think that the market underestimates the value of the target enterprise,and thus the over-investment will result in a significant decline in the performance of the merger.Therefore,there is a certain correlation between the managers' overconfidence and the performance of the merger.On the other hand,effective internal control system can prevent the risk of management's overconfidence decision-making,alleviate the conflict of interest caused by the agency mechanism and the separation of the two powers,and improve the reliability of decision-making.In the decision of the merger,it also can bring a significant decline in performance of mergers and acquisitions,and enhance the M&A performance and the value of the corporate.This paper introduces the macro-finance theory to the micro-M&A activities from the perspective of the overconfidence.At the same time,it also introduces the effectiveness of the internal control.This paper mainly uses the method of normative research and empirical research to analyze the listed companies in Shanghai and Shenzhen A-share listed companies from 2012 to 2014.And using the earnings forecast deviation method to measure the managers' overconfidence.This paper uses the accounting index method to construct the M&A index system from the aspects of debt paying ability and so on,and use the factor analysis method to establish the comprehensive score equation to measure the performance of M&A.Through empirical test,it is concluded that managers' overconfidence has a negative correlation with M & A performance and the effective performance of internal control is weakened negative correlation between the two.This paper introduces the internal control as the regulatory variables in the process of the study,which devotes to the influence of managers' overconfidence on the performance of M&A.And it also examines the influence between the overconfidence and the performance of M&A.The full text is divided into five parts.The first part is the introduction.It introduces the background and significance of the study,combing the literature review,and introduces the research framework of this article.The second part is the theoretical basis and puts forward the hypothesis of this article.The third part is the study design.Selecting the study of the sample and setting the variables,and establishing the models through the factor analysis of the performance of the merger evaluation.In the fourth part,we do the empirical analysis.We do the descriptive statistic,the regression analysis and the robustness test.In the fifth part,we have the results of the empirical analysis and make the recommendations of this paper.