Influence Analysis Of Equity Incentive On Merger And Acquisition Performance Of Listed Company

Since M&A becomes a hot trend among the capital market in 2014,M&A events disclosed by listed companies have increased dramatically,so the effect of M&A on the enterprise performance has attracted much attention.This paper selected 247 M&A samples over the 2008-2012 periods,and converted 13 financial indexes from one year before M&A to three years after M&A into one comprehensive performance score of each sample through the factor analysis model.Finally,this paper found that the average net income growth of samples in the one year before M&A was negative,but got a boost in the same year of M&A.Meanwhile,the comprehensive performance score also got a raise within the one year after M&A,but not significant.However,the comprehensive performance score has dropped significantly in 2 to 3 years after M&A.Based on above,this paper took the comprehensive performance difference before and after M&A as the explained variable,with the proportion of management ownership as the explanatory variable to make the regression analysis.Eventually,this paper found that management ownership of listed company played a positive role in improving the performance in the same year of M&A,but not significantly.But there is a significant negative impact on long-term M&A performance.At the same time,the number of management motivation also had significantly negative effect on the M&A performance all the time.Especially when the ownership concentration of the listed company was lower than 50% or the company was non-state-owned enterprise,the conclusion was just the same.On the contrary,when the ownership concentration of the listed company was higher than 50% or the company was state-owned enterprise,equity incentive had no influence on the M&A performance.In conclusion,the M&A performance of listed companies was closely related to the management equity incentive.When the holding position of the first majority shareholder was weak,the higher the management equity incentive lever was,the management would have more motivation in taking advantage of M&A to improve short-term net income that was enough to satisfy the equity incentive condition,and to pull up the stock price that was convenient for the management to get benefit through selling the holding stocks.So,the management might be not cautious and rational enough to make the decision on the M&A,causing that the company’s short-term performance got improved,at the cost of sacrificing the shareholders’ long-term interests.Based on the conclusion,with regard to the methods of improving internal and external conditions of the management equity incentive this paper put forward several corresponding suggestions,in order to help effectively improving the quality of M&A of listed companies.