The Motives, Capabilities, And Economic Consequences Of Executives' Response To Hostile Takeovers

Mergers and acquisitions have always been the important and hot topics of corporate financial researches.How to successfully resist hostile mergers and acquisitions is a challenge faced by company management.How do top executives react to hostile mergers and acquisitions when the target companies lack traditional anti-hostile provisions? What are the economic consequences of different hostile mergers and acquisitions? Those are the main problems to be solved in this paper.This paper studies the incentives and capability of executives' response to hostile mergers and acquisitions,and the corresponding economic consequences by case studying BaoNeng's acquisition of Vanke and Shenzhen CSG.BaoNeng eventually held 25.05% of CSG's shares in 11 months and successfully had representatives in CSG's board of directors in January 2016 and finally replaced the management team.BaoNeng acquired Vanke for 18 months and costed about 44 billion yuan,eventually held 25.04% of Vanke's shares.However,BaoNeng had not sent any directors and other senior executives to Vanke,and began to withdraw in April 2018.In the two acquisition cases,the original executive team of Vanke and CSG had great differences in motivations and capabilities to deal with hostile mergers and acquisitions.The executive team of Vanke is younger and has been worked in the company for a longer time.As a result,the whole team has higher stability and stronger insider controlling.In contrast,the executive team of CSG is older and has little financial background.Basically all of them are technically born,and the stability of the entire executive team is relatively low.The economic consequences after the merger are also different.The performance of Vanke has been less affected during the whole process;while the performance of CSG has been worsening after the entry of BaoNeng.Most companies in China lack the necessary anti-hostile provisions.This article provides the possible ways to blackout hostile mergers and acquisitions from the perspective of executives and the corresponding consequences which enriches the related research and provides new evidence on executives' influence.