The Impact Of CEO's Tenure On Corporate M&A Decisions And M&A Performance

In today's fierce and ever-changing competitive environment,the inward-oriented strategic development mode that relies on the slow internal accumulation of the enterprise itself cannot fully adapt to the economic development model under the background of global integration.Through mergers and acquisitions,enterprises can quickly integrate the industry in a short period of time to increase market share and expand business scale.Through mergers and acquisitions,the upstream and downstream industries can achieve vertical extension of the industrial chain,and even expand to other industries to achieve diversified development.As a major economic development country in the Asia-Pacific region,China replaced the United States for the first time in September 2016 and became the world's largest foreign asset purchaser.With the influence and boost of listed companies in China's national economy,mergers and acquisitions of listed companies have become an important part of economic transformation and upgrading,optimization of resource allocation and economic structure adjustment.Hambrick & Mason first proposed the Upper Echelons Theory in 1984.The main point is that the enterprise is the reflection of the senior management,which emphasizes the important role that senior managers play in the successful operation of the enterprise.Upper Echelons Theory believes that the demographic characteristics of executives,such as tenure,age,gender,and educational background,can explain the strategic choices of enterprises and the performance of enterprises to some extent.It has become a consensus of the academic community that executives' tenure as one of the demographic characteristics of executives has a significant impact on the strategic decision-making and performance of enterprises.Since ancient times,there has been an old saying in China that "new officials took up three fires." This old saying is the embodiment of the "primacy effect",that is,the newly appointed officials are expected to take the lead through the primacy effect and leave a good impression on the recipients of the information.To lay a good foundation for further communication in the future."The new official took up three fires" is a common perception of Chinese people,reflecting the influence of the Tenure of office on the style of the officials.Mergers and acquisitions are an important means for the rapid growth of enterprises.Then the first-effect effect of the “three new fires of new officials” will be reflected in the new CEO selection decisions and M&A performance of listed companies in China.This is an interesting question.Based on this,this paper walks through the domestic and foreign scholars' literature on executive tenure and executive characteristics on corporate performance,and empirically analyzes the M&A data of the stock markets in Shanghai and Shenzhen from 2010 to 2017.This paper also studies the relationship among CEO's tenure,corporate M&A decisions and M&A performance.The study found that compared with later years of career,CEOs are more likely to choose M&A strategies at the beginning of their careers,and the M&A premiums paid during the M&A process are relatively lower,and the final M&A performance is better.Through the research in this paper,the application of high-order management theory in the field of M&A performance is enriched,and a new perspective on the M&A premium from the perspective of CEO Tenure is opened.