Economic Policy Uncertainty And Corporate M&A-Impact,Mechanism And Economic Consequences

In recent years,with China's market economy reform continuing to deepen and the improvement of China's M&A policy system,M&A has become a major method to accelerate the expansion and realization of scale effect for various companies.The M&A strategy has become the new normal in business management.At the same time,China is experiencing a special period of "three-phase superposition" of shifting economic growth rate,accelerating structural adjustment and digesting previous stimulation,during which the central government promulgates various macro-control policies frequently to steadily guide the economic operation.However,such frequently macro-control policies cause China's overall economic situation uncertainty to be at a relatively high level.It has been shown in previous literature that economic policy uncertainty will affect the investment decisions of listed companies,and that M&A,as a large-scale and complex professional investment decision,are equally affected by economic policy uncertainty.It is a topic worth exploring.Learning from the process of measuring the Economic Policy Uncertainty(EPU)index in Baker 's paper,this paper uses Naive Bayes Classification to classify all the published news in authoritative newspapers from 2008 to 2015,in order to construct an EPU index that is more comprehensive and suitable for Chinese market.This paper selects the 2009-2016 M&A events of China's A-share non-financial listed companies as a research sample,and uses the Chinese EPU index constructed to analyze the phenomenon,influence mechanism and economic consequences of M&A under the uncertainty of economic policy,based on real option theory,information asymmetry theory and principal-agent theory.The study finds that the uncertainty of economic policy has restrained the M&A motives,the M&A frequency and the M&A scale of listed companies in China.In the period of strong economic policy uncertainty,in order to deliver a good business signal to outside investors to win their trust,the main companies are more willing to choose cash payment methods;compared to real options mechanism,financing constraint mechanism can better explain the reasons for economic policy uncertainty to curb M&A,and companies with adequate financial flexibility reserves can better implement M&A decisions in the face of economic policy uncertainty;in addition,economic policy uncertainty will also significantly reduce the M&A performance of the company,which may be caused by the blind M&A of the company's management under the pretext of "uncertainty".The conclusions of this paper have important reference and enlightenment for the formulation of China's economic policy,the decision-making of M&A,financial flexible reserves and management governance of listed companies.