Research On M&A Premium And M&A Performance Based On Reference Point Effect Of Contract

The increasingly fierce competition among enterprises has made shareholders pay more attention to the operating performance of senior executives,and the sensitivity of executive compensation has also played an increasingly important role.Companies regard scale as one of the most important indicators of executive performance.The size of the company is one of the most important factors affecting compensation.M&A,as an important strategic decision to rapidly expand the scale of the company,has become an important means for executives to achieve operating performance and increase their own salaries.Prospect theory and contract reference point theory believe that managers have a social preference for their own cognitive process of pay,and then set certain social reference points in the subconscious,managers compare their own pay with reference points,and the strength of incentives for compensation.Perception affects the quality of the parties' performance.Previous literature has studied pay or mergers and acquisitions in three areas:research on private interests based on principal-agent theory,research on the personal characteristics of senior executives based on higher-order theory,and psychological activities based on behavioral economic theory for executives,the study.The research on the relationship between executive compensation and mergers and acquisitions is based solely on principal-agent theory and higher-order theory.It ignores the influence of executives' psychological perceptions on their own perception of mergers and acquisitions.Then,under the role of the contract reference point,how does the executive's psychological perception of the level of salary incentive he received affect the scale of mergers and acquisitions?What is the ultimate M&A performance?Based on the prospect theory and the contract reference point theory,this paper studies the influence of the psychological response of executives after comparing the compensation incentives they receive with the reference point,and the characteristics of their subsequent M&A behaviors.This paper selects the sample data of M&A from 2010 to 2017.From the perspective of limited rational agents,consider the social reference factors when executives evaluate their own salaries,divide the compensation reference points into vertical reference points and horizontal reference points,and use empirical methods.The effect of the reference point effect of the compensation contract on the M&A scale at the time of M&A and the M&A performance after the M&A was completed was examined,and the existence of the impact in the state-owned and private enterprises was examined.This paper finds that when executives compare their own remunerations with reference points,the higher the relative remuneration obtained,the smaller the scale of mergers and acquisitions,and the better the achievement of M&A performance;and this impact exists only in private enterprises,in the state-owned enterprises.Does not exist.This article studies the relationship between executive compensation and merger and acquisition behavior based on the theory of psychology and behavioral economics,and makes up for the defects in the research on the relationship between compensation and mergers and acquisitions.On the one hand,this paper provides a reliable reference standard for the formulation of the company's remuneration,helps the company adjust the performance evaluation indicators,and improves the quality of performance in the process of executive management of the company;on the other hand,it helps the company to correctly understand the merger and acquisition behavior taken by the senior management and ensure that When executives take mergers and acquisitions into account,they must consider the long-term development of the company instead of boosting their own remuneration and rush to expand the scale of the company and thus harm the interests of the company.The research content of this paper mainly focuses on the impact of the reference point effect of executive compensation contract on mergers and acquisitions.It is divided into eight chapters.The specific contents are as follows:Chapter 1 is the introduction:it mainly expounds the research background,research significance,research methods and innovation points.Chapter 2 is a review and review of the literature:a review of the literature on the relationship between mergers and acquisitions,the relationship between compensation and mergers,and the reference point effect and decision-making behavior of the compensation contract,and a literature review.Chapter 3 presents theoretical analysis and hypothesis:by expounding the theory of mergers and acquisitions and contractual reference points,the existing literature research is used to derive the hypothesis of this paper.Chapters 4 and 5 are respectively the research design and empirical results analysis:the model design and variable selection are introduced,and the relationship between the reference point effect of the compensation contract and the M&A premium and the performance of long-term and short-term mergers and acquisitions is analyzed.Chapter 6 is a test of robustness:the robustness of the previous regression analysis is tested by adjusting the measure of explanatory variables.Chapter 7 is for further research:based on the different nature of property rights,the relationship between the reference point effect of compensation contract and the merger and acquisition premium and the performance of long-term and short-term mergers and acquisitions in state-owned enterprises and non-state-owned enterprises are studied.Chapter 8 is the conclusion of the study and the policy recommendations.The empirical results are summarized to draw the conclusions of this paper.At the same time,suggestions are made from two aspects:salary formulation and M&A implementation.Finally,the shortcomings of this paper and the future research directions are pointed out.