Study On Overseas Acquisition And Its Economic Consequences Based On Management's Risk Propensity

Since the 21 st century,the Chinese government has been encouraging enterprises to go on the way of globalization,so the total export investment of Chinese enterprises and institutional investors has been increasing in recent years.Overseas acquisition has become an important mode of export investment.In the wave of overseas acquisitions,successful enterprises are few,most of which do not obtain the expected revenue,therefore this phenomenon causes the academic research.The academic research on this aspect gradually shifted from the external factors to the internal factors for example whether investors are rational,which focused on the perspective of behavioral finance.This paper concludes and summarizes literature about risk propensity and overseas acquisition on the basis of behavioral finance.This paper builds theoretical framework for the relationship between management's risk propensity and overseas acquisitions,on the basis of a high ladder team theory,the cumulative prospect theory,achievement motivation theory and psychological decision theory.This paper tries to propose suggestions from risk propensity and overseas acquisitions in order to avoid irrational decision and the its economic consequences,with case analysis and reference.This paper sets up an analytical framework for overseas acquisitions from the perspective of management's risk propensity.First,it describes the risk propensity by personal characteristics and corporate characteristics.Then,the motivation of overseas acquisition is analyzed according as management who has high risk propensity is unwilling to the failure and eager for success.According to insufficient risk perception,strong risk preference and aggressive management style of management who has high risk propensity,this paper analyzes the problems in the process of overseas acquisition,including insufficient due diligence,excessive cash payment and debt financing,and neglect of integration.Finally,based on the relationship between risk propensity and overseas acquisition,the paper analyzes that management's risk propensity will bring adverse economic consequences from market value,market share and business ability.The possible innovation work of this paper firstly focuses on the new research angle of management's risk propensity.Secondly,the case is selected to answer the specific impact of management's risk propensity on the motivations,problems and economic consequences of overseas acquisitions.Then,improvement suggestions are put forward from behavioral finance,corporate governance structure and overseas acquisition.On the one hand,relevant literatures are enriched.On the other hand,reference suggestions are provided for companies' overseas investment or overseas acquisition.