The Rank Of Asset Assessment Agency To M&A Efficiency:Theoretical And Empirical Research

M&A is an important way for companies to expand and gain market shares,and also is an important part of China's capital market.In recent years,M&A of Chinese enterprises are frequent.The M&A efficiency for whether the transaction price of M&A can reflect the accurate value is the key issue that the relevant parties of M&A need to consider.However,the information asymmetry between the two sides of the M&A will have an impact on the efficiency of M&A.Therefore,in order to improve the efficiency of mergers and acquisitions,the acquirer usually entrust the asset assessment agency to assess the value of the target companies and decide the price of mergers and acquisitions based on it.In this process,the rank of the asset assessment agency obviously affects the efficiency of the M&A.But the previous literature on this problem is less,most of them are empirical research,and lack of theoretical supports.In view of this,this paper put the asset assessment agency in the dynamic game model of transaction between the two sides of M&A,taking into consideration the impact of the rank of assessment agencies on the efficiency of mergers and acquisitions.By analyzing the best strategy of asset assessment agency to provide value evaluation for target enterprises,we find that excellent asset assessment agency can really improve the efficiency of mergers and acquisitions.We use the game model as the theoretical basis,based on the Chinese enterprises M&A data from 2012 to 2016 as the sample,with the absolute level of deviation degree between acquisition price and the value of assessment,on the one hand,we use the 0-1 variables based on absolute level to measure the efficiency of acquisition.On the other hand,we use the institution ranking to measure their rank,and use the logit model and the treatment effect model to control their self-selection problem to inspect the influence of the asset assessment agencies' rank on the efficiency of M&A respectively,and we obtain the following results:(1)in the overall sample,the rank of asset assessment agencies which participate in M&A is better,the deviation degree between transaction price and the assessment value is significantly smaller,which means the excellent assessment agencies can significantly improve the efficiency of acquisition;(2)although the sample self-selection problem makes the Logit model estimation results overestimated the influence of assessment agencies for M&A.But after use the treatment effect model to eliminate the influence of sample self-selection,assessment agencies still significantly improve the efficiency of acquisition;(3)in the M&A between state-owned enterprises,asset assessment agencies' rank is better,M&A efficiency is lower,the reason is the local government and business executives often increase or decrease the price of transactions because of performance requirements?employment or the existence of local protectionism;(4)in the M&A with connected transactions,asset assessment agencies' rank is better,M&A efficiency is lower,because the large shareholders have the motivation to transfer their benefits,so they maybe let the target companies provides historical information selectively when the assessment agencies are evaluating,;(5)in the transaction which acquires are non-state-owned enterprises or institutions holding share rate of it is higher,or the acquires'company address has a higher degree of marketization,the assessment agencies'rank is better,the M&A efficiency is higher,because the supervision and legal system are more rigorous,so the rank of institutions can play its role to solve the asymmetry information problem of M&A;(6)in the transaction which acquires' institutions holding share rate is lower,or the acquires' company address has a lower degree of marketization,the assessment agencies' rank does not significantly affect the efficiency of M&A,this may be because the transparency of information is lower and the demand for high quality evaluation results is low.Furthermore,in the robustness test of variable substitution,these results are still established.The results of this study can be of great inspiration to the Listed Companies in M&A and the development of evaluation institutions.