Analyst Coverage And M&A Decision

With the continuous deepening development of China's capital market,mergers and acquisitions are increasingly active as an important way to optimize resource allocation and improve the quality of listed companies.As the information intermediary of the capital market,analysts,on the one hand,make predictions by virtue of their professional analysis and research ability after studying the stock market,transmit information to the market,and influence the judgment of investors on the intrinsic value of enterprises.On the other hand,through the analysis and research of the past and present business development of the enterprise,analysts can judge the future direction of the company's stock price,provide the company's management with decision-making information,and influence the M&A behavior of the enterprise.Therefore,based on the behavioral finance theory and based on the perspective of analysts,this article selects listed companies that have merged and acquired transactions in the Shanghai and Shenzhen A-share markets from 2010 to 2015 as samples.Analyze the impact of China's securities analysts' coverage on corporate M&A decisions,M&A roles,and M&A payment methods and their impact paths.The research finds that(1)the coverage of analysts will cause the market value of enterprises to deviate from their real value in the short term.The higher the coverage of analysts,the more inclined the companies are to participate in mergers and acquisitions,and this influence mechanism plays a role through the intermediary channel of market mispricing.(2)the higher the coverage of analysts,the more overvalued the M&A company is in the short term,and the more likely it is to be acquired by others,that is,to become the target.Companies with more analysts' coverage are more likely to be sought after by the market,and when the price is overvalued,they are more likely to be regarded as a potential good target by the dominant side and launch a merger offer to them.(3)for the M&A payment method,analysts' coverage is the direct factor affecting the payment method.Meanwhile,the higher the analyst's coverage is,the more inclined the M&A company is to adopt the cash payment method,so as to improve the probability of its M&A success.The above research results show that,while the information disclosure mechanism is not perfect in China,the securities analysts,as an extra-legal alternative mechanism,have not reduced the market's irrational valuation of companies.These findings not only clarify the influence mechanism of analysts' coverage on enterprise M&A decisions,but also provide useful enlightenment for Chinese investors to make investment decisions and government regulatory departments to formulate regulatory policies.