The Influence Of Management's Personal Benefits And Overconfidence On The Establishment Of Buyout Fund By Listed Companies

With the steady development of China's economy,the development logic of market value driven by the main business gradually loses its advantages,and the enthusiasm of listed companies for active M&A gradually increases,the "PE + listed companies" buyout fund has become a "hot choice" for listed companies.However,this model is lack of effective supervision mechanism,which exposes many problems in the continuous development.Firstly,in the legal relationship and mechanism design of buyout funds,listed companies have too much power,which makes the management play a leading role.The principal-agent theory and managerial overconfidence theory put forward that management's personal benefits and overconfidence promote enterprises to carry out M&A;then will the irrational behavior of management affect the decision which closely related to M&A? Secondly,with regard to the buyout funds,there are some disputes: "bid up the stock price","zombie fund",insider trading,what are the market attitude towards the establishment of buyout fund by listed companies? And is the market reaction influenced by the irrational behavior of the management? In this paper,the management's private benefits are mainly reflected in their ability to seek on-the-job consumption,while the management's overconfidence is reflected in their initiative to increase the company's shares.At present,the research of theory and literature mainly focuses on the market reaction of listed companies to establish buyout funds and how the company's factors affect this decision,which has not been explored from the perspective of management.And the research on the influence of management's personal benefits and overconfidence on investment and merger decision-making is relatively mature.Based on the relevant theories of corporate finance and behavioral finance,this paper will analyze the impact on the decision-making of buyout funds by listed companies from the perspective of management,which is also the biggest innovation of this paper.Based on the above-mentioned realistic background and theoretical research space,this paper analyzes the mode of "PE + listed companies" buyout funds,points out the existing problems in its development,such as mismatching of rights and responsibilities,"zombie fund","bid up the stock price",insider trading,and so on,and establishes the keynote of this paper.Combined with the current situation,according to the principal-agent theory,the management power theory,the managerial overconfidence theory,the information and stock price theory and the efficient market hypothesis,this paper constructs a theoretical model of the influence of the management's personal benefits and overconfidence on the establishment of buyout funds by listed companies,mainly to explore influence on the decision-making and the market reaction of the decision.In the impact of market reaction to this decision,this paper focuses on the analysis of the intermediary role played by the times of M&A and the amount of investment.Finally,this paper takes the non-financial listed companies that set up buyout funds in 2014-2018 as samples,and uses regression analysis,event research and structural equation model to conduct empirical test.According to the empirical test results of this paper,first of all,management's private benefits and overconfidence will indeed affect the decision-making of listed companies to establish buyout funds.This shows as follows: when the management makes use of their power to expand more on-the-job consumption,increase salaries,and actively increase the shares of the company or launch M&A frequently,they will promote the establishment of buyout funds;and the private benefits of the management will promote the listed companies to increase the amount of capital contribution in the buyout funds;but the overconfident management will reduce the amount of capital contribution instead.Secondly,although the buyout funds can create shareholder wealth in the short term,it will damage the interests of listed companies in the long term.Finally,management's personal benefits and overconfidence will affect the short-term market reaction of this decision through the times of M&A.This shows that market investors pay more attention to the real intention behind the establishment of buyout funds by listed companies,and the past M&A activities of listed companies often reflect their real needs.Therefore,in the supervision and management of buyout funds of Listed Companies in the future,it is necessary to identify the true intention of the management to avoid the loss caused by decision-making mistakes.