How The Remuneration Of The Top Manages In Acquired Companies Effects The Acquired Company's Performance

Many researches have pointed out through empirical analysis that most M&A performance is negative,that is to say,most companies do not create new value by means of mergers and acquisitions.Except for those investors who aim at acquiring intangible asset ownership and financial investment,such as shell resources and patented technology,M&A integration is a key step in many factors affecting M&A performance.furthermore,the key point in M&A integration is compensation integration.Whether the management of the new accommodative company can meet the main and corporate strategic principles to achieve production goals or to create value is the way to tell if the M&A is a success?Whether the formulation of the executive compensation of the company in the salary integration achieves the incentive effect to the top managers is crucial to the success of the compensation integration.The researches in the past about mergers and acquisitions and executive compensation includes the principal-agent theory about the self-interest of executives and the interests of shareholders,then high-order theory about the influence of the status quo of executives on organizations,and the behavioral economics theory about executives to the perception of the level of salary incentives.However,the research object is limited to the executives of the acquiring enterprises.For the external shock like mergers and acquisitions,should the reference for the salary of the senior executives of the acquired Companies be the same as the general salary formulation in the acquiring Companies?If so,can they achieve the expected M&A performance?This paper refers to the prospect theory and the contract reference point theory,studies the choice of the reference point of the executive compensation of the merged enterprise and the impact of its behavior on the M&A performance.Starting from the limited rational person,considering the reference factor of the executive Compensation of the enterprise,to study how the salary will be paid.The reference points are divided into three dimensions:external reference point,internal reference point and current reference point.The empirical study verifies the choice of the reference point of the executive Compensation and the impact on the M&A performance.This research has discovered some key points:Firstly,there are external,internal and current reference effects in the formulation of executive compensation for inquired companies.Secondly,the gap between the M&A executives and the external reference points and the current reference points has a significant impact on the M&A performance,while the gap between the M&A executives and the internal reference points has no significant impact on M&A performance,showing that the fairness of the salary in the company plays a less important role than propensity score matching outside standards.In the aspect of behavioral economics theory,this paper discusses the impact of M&A behavior as an external shock on the formulation of executive Compensation and the performance of the Company,and makes up for the lack of researching on the acquired top managers as objects in the domestic literature about mergers and acquisitions and executive Compensation.provide theoretical and empirical evidence to the acquiring Companies so that they could selection the appropriate incentives for the top managers in the acquired Companies.