The Impact Of Pyramid Ownership Structure On M&A Behavior Of Listed Companies

The mergers and acquisitions(M&A)is one of the effective behaviors in companies to seek further development,which can achieve effective allocation of resources and improve operational efficiency.The listed companies in China generally adopt the pyramid structure and the actual controllers control the listed companies through the hierarchical structure finally.At present,many literatures have studied the influence of pyramid ownership structure characteristics on M&A from different angles such as company value,stock value,tunnel effect and government intervention.These structural characteristic variables mainly include the separation of ownership and cash flow rights and pyramid layer.Compared with the above problems,there are few literatures that systematic explain the pyramid structure affecting M&A behavior,and there is no analysis of the mediation factors.Most of these use M&A performance as the explained variable,while there are less studying the pyramid structure to other M&A characteristics such as M&A premiums,M&A method,and M&A types;in addition,existing research does not explore whether the pyramid structure of different actual controllers has different ways of affecting M&A.Based on the previous literature review and theoretical analysis,We summarizes four channels of pyramid structures affecting M&A behavior,namely capital structure effect,interest encroachment effect,financing constraint effect and government intervention effect.According to these effects,we research the impact of pyramid structures on M&A premiums,M&A method,and M&A types.The paper is divided into six parts,which are introduction,literature review,theoretical analysis and research hypothesis,data selection,empirical analysis and conclusion-The paper selects the listed companies that have undergone major mergers and acquisitions during 2011-2016.We uses simple regression models,Logit models and other methods for empirical analysis.The data about M&A behavior is obtained as the explanatory variable through the Wind database,and the pyramid structure variables,such as the separation of ownership and cash flow rights,pyramid layer,and the characteristics of the share chain as explanatory variables.The results of empirical analysis show that:(1)For the study of M&A premium,we find that the pyramid structure can reduce the level of M&A premium,and this effect is more obvious in state-owned companies than in private companies.This explains that capital structure effect is greater than interest encroachment effect.In addition,it also shows that the pyramid layer variables in state-owned companies have alleviated government intervention and played an important role in reducing the level of M&A premium.(2)For the study of M&A method,we find that the pyramid structure can reduce the possibility of issuing share payments,and it is more obvious in private companies.Further research finds that private companies are more likely to issue share payments with high M&A premium than state-owned companies.(3)For the study of M&A type,we find in the pyramid structure,the greater the separation of ownership and cash flow rights,the more likely diversified M&A adopted,which is more significant in private companies;The finding in state-owned companies shows that the pyramid layer is negatively correlated with the probability of diversified M&A.Further research on the M&A premium,the hypothesis that diversified M&A will raise the M&A premium level is verified.At present,in the atmosphere of the development of China's market economy and capital market and the increasingly M&A activities,this paper describes how the ownership structure affects M&A activities.This paper can provide a basis for the company's M&A decision,guiding the companies to optimize the financing structure,playing the synergy effect of M&A,improving the capital marketization of the companies,strengthening the supervision of the actual controller,and protecting the interests of small investors.