CEO Retirement Age,Independent Directors And Acquisitions Of Target Firms

M&A is one of the most effective ways to allocate resources.With the rapid development of China's capital market,Chinese companies' M&A activity has become more frequent and the amount of M&A has become increasingly large.The merger and acquisition incident has aroused widespread concern in academia and practice.At present,domestic research on M&A events mainly focuses on acquirers' M&A motivation,M&A on management-level and firm-level factors,and M&A performance.This article focuses on the relationship between the acquired CEO's personal characteristics and mergers and acquisitions.The article starts with the private M&A costs of the target company's CEO in the M&A process,and combines the “retirement age effect” to theoretically analyze the influence of the acquired CEO's personal characteristics,especially the CEO's retirement age,on the probability of M&A events,then analyzes the adjustment role of independent directors who play a supervisory and advisory role in this effect,and then a comparison of this effect between the state-owned and non-state-owned enterprises,and the effect of the target CEO at the retirement age on the cumulative abnormal return on the first announcement date of the enterprise acquisition and M&A premiums.Thus,the paper puts forward theoretical assumptions.Next,collect data of China's listed A-share company mergers and acquisitions from 2006 to 2015,using multiple regression analysis methods to verify the theoretical assumptions put forward by the article.Then,the paper does some alternative explanations about the channels that may cause the change of takeovers frequencies when target CEOs approach retirement age.Finally,we get concluded.The study found that:(1)When the target company's CEO is in retirement age,the CEO's private merger and acquisition costs will decrease,and the probability of the company being acquired will increase significantly.(2)Independent directors have supervisory effect on the behavior of the target company's CEO in the mergers and acquisitions that harms the interests of shareholders.The independence of the board of directors restrains the increase in the probability of merg ers and acquisitions of the company caused by the CEO's retirement age.(3)Compared with non-state-owned enterprises,when the CEO of a state-owned company is in retirement age,the probability of the company being acquired will increase even more.(4)When the target company's CEO is in retirement age,the cumulative abnormal return for the first announcement date of the company's acquisition and takeover premium will be higher.From the perspective of the target company,this paper studies the influence of the target CEO retirement age on the probability of target company M&A and the inhibitory effect of independent directors on this influence.The paper expands and enriches the study of “probability of target company mergers and acquisitions” and “the supervision effect of independent director”.The paper provides useful revelation for listed companies to make better acquisitions.