An Empirical Study Of The Impact Of Short Selling Mechanism On M&A Performance

As the wave of M&A in the world continues to advance,M&A have become one of the most important ways for the integration of enterprise resources and strategic expansion.Research on the performance of M&A has become an important issue concerned by academia.Among them,the agency conflict in M&A decision-making is an important factor leading to poor performance of M&A.Therefore,it is of great research value to study the governance mechanism that constrains the agent problem in the M&A activity.As an important complement to the existing corporate governance mechanism in our country,the formal implementation of margin trading program is a milestone institutional event in China's capital market.As a mechanism for innovation,margin trading ended the history of China's stock market has no short selling mechanism.Different from the capital markets of developed countries,China's Margin trading business has undergone a special process of pilot-scale promotion and target-stock expansion in stages.Since the implementation of the system,the scale of short selling has significantly improved.The stock market consequences of short selling have caused extensive research in academia.In recent years,academics mainly start from the question of agency of enterprises,focus on the margin trading on corporate micro-behavior,especially short-term behavior.However,the existing literature seldom studies the governance effect of short selling mechanism on M&A performance.Therefore,under the background of the transition of our economic system,the systematic analysis of the implementation of margin trading program has an important theoretical contribution to the objective performance,influencing factors and value effects of the corporate M&A performance.It not only provides reference for policymakers,market participants to assess and understand the economic consequences of short selling mechanism,but also provides empirical evidence for alleviating agency problems in M&A decisionmaking and enhancing M&A performance and helps companies to make M&A decisions scientifically.According to social network theory,managers make decisions that depend on the information advantages of the network location.However,studies have shown that information superiority does not equal the realized M&A performance.Whether the value of information superiority can be achieved in M&A decision depends on the willingness of decision makers to search for information and then to information resources.Information resources can reduce uncertainty around M&A and improve M&A performance.Due to information asymmetry and moral hazard,managers usually balance the cost-benefit of M&A information search in order to meet the goal of maximizing personal interests.They often reduce the willingness to collect additional information subjectively.So as to reduce the accuracy of M&A decision without reasonable use of information superiority and result in implicit loss.As an important external governance mechanism,short selling mechanism mainly mines managers' agency problem in the use of information superiority by price discovery and information intermediary role and puts pressure on managers' personal wealth and job security by putting these negative messages in the stock price.Then alleviating the manager's agency problem in the M&A decision-making and improving the performance of M&A eventually.Further,the governance effect of the short selling mechanism on M&A performance is influenced by the sources of information superiority in different social networks within and outside the enterprise.Based on the source of information superiority within the enterprise,the network embedded in the enterprise can be traced back to the individual relationships in the enterprise.A more important relationship is established through the power of management network relations among them.As the important maker and participator of the M&A decision-making,the manager's power is the important internal source of managers gaining information superiority in the enterprise internal network.It is also a key factor in determining the quality of M&A decisions.The greater the power of management,the more obvious the advantage of information generated by the network location.However,the capital market gives more negative reactions to M&A under the power of management.Because executives driven by the power with the strong motivation take blind large-scale mergers and acquisitions activities in order to obtain scale returns.Shorter investors are more likely to be profitable by disclosing negative information in mergers and acquisitions decisions,thereby strengthening oversight of high-power managers' M&A decisions.In addition,improving core competitiveness is one of the most important motivations for M&A in the increasingly fierce market competition of the contemporary era.Enterprises embed external market network through mergers and acquisitions to achieve the integration of enterprise resources,access to unique market resources,then build the market competitive advantage.Enterprises rely on the market competitive advantage to obtain a certain degree of monopoly power,the establishment of the relative control advantages,the center of information gathering.It can form a relative information superiority through obtaining information,grasping the competitive opportunities and integrating resources.Therefore,the competitive advantage of an enterprise is an important external source for management to gain information superiority.However,it also provides a safer environment for managers' self-serving motives.The rich market information advantage owned by Managers provides an opportunity for their selfinterest of M&A expansion.As a result,a large number of inefficient M&A activities have been breached.And it triggers the widespread concern of short sellers.Then they improve managers' M&A performance with the market information advantage through short selling mechanism.Finally,the governance effect of short selling on corporate M&A performance also depends on other market governance mechanisms.Among them,the product market competition is an important bridge linking the macro system with the micro-enterprise.It can supervise and constrain non-normal monopoly motivation and agency problems in merger and acquisition through industry competitive pressure.Therefore,the role of short selling mechanism on corporate M & A performance will be affected by the degree of competition in the industry.Based on principal-agent theory and social network theory,this paper takes the A-share listed companies in Shanghai and Shenzhen stock markets as the research sample.By using the double difference model and propensity score matching method,this paper examines the governance role of short selling mechanism on agency issues in M&A decision from the information superiority perspective.It also used the financial indicators method and the event research method to calculate the value effect of the short selling mechanism on the performance of long-term and short-term M&A.This article further examines the different sources of information superiority in the internal and external social networks-the power of management and the competitive advantages of enterprises,and the regulating role of short selling mechanism in the performance of M&A.Finally,this paper investigates the influencing factors of the effect of short selling on M&A performance from the perspective of external governance mechanism.Focusing on the important market governance mechanism outside the enterprise-product market competition,this paper explores whether it will make the difference in the governance effect of short selling mechanism on M&A performance.The main four conclusions are as follows:(1)The implementation of short selling mechanism will significantly improve the performance of M&A;(2)The higher the management's power,the more obvious the governance effect of the short selling mechanism;(3)The stronger the competitive advantage of enterprises,the more obvious the governance effect of short selling mechanism on M&A performance;(4)The governance effect of short selling mechanism on M&A performance varies with the degree of competition in the industry.Among them,the effect of short selling mechanism on short-term M&A performance is more significant when competition in the industry is weak.For long-term M&A performance of enterprises,the short selling mechanism plays a more significant role in controlling M&A performance when the industry is fiercely competitive.