Military Executives And Corporate Mergers And Acquisition

After the founding of the People’s Republic of China,the Chinese People’s Liberation Army has carried out eleven large-scale disarmaments in accordance with the needs of national construction and development.They have made great contributions and sacrifices.Chinese military service system is a special military service system combining conscripts and volunteers.In order to consolidate the mass foundation of national defense construction,stimulate the motivation of the soldiers to strengthen the army and serve the country,and solve the practical difficulties of the soldiers,China has established a series of resettlement and management guarantee systems for veterans to clear the obstacles for the veterans to integrate into local construction.Since the 19 th National Congress of the Communist Party of China,stateowned enterprises,especially central enterprises,have gradually become an important channel for the placement of veterans.In the future,more and more military executives will show up.Looking back at the military entrepreneurs who have become household names,we can find that mergers and acquisitions are an effective way for them to promote the rapid development of their companies.So how do military executives influence their company’s M&A decisions and what kind of performance does it create for the company? Based on the data of Chinese listed companies,this paper will empirically study the influence of military executives on the M&A behavior of their companies.Existing research has achieved a lot of results in the impact of managers’ personal characteristics on company business decisions,and the research direction has gradually expanded from managers’ physiological characteristics and educational background to overconfidence,early life experience and disaster experience.Scholars have yet to come to a unified conclusion on how military executives influence a company’s operating decisions.Some scholars believe that military executives attach great importance to honor and responsibility.They will be responsible for the overall interests of the company as much as possible,and have excellent crisis handling capabilities;Other scholars believe that military experience has cultivated military executives into adventurers,and their high-risk appetite and overconfidence make companies more aggressive in their investment and financing methods and strategies.On the other hand,mergers and acquisitions are generally considered to be a high-risk,high-return corporate investment behavior.Scholars have explained the reasons for mergers and acquisitions from multiple perspectives,but only a few merger motivation theories link managers and companies’ behaviors are linked together.Based on the current academic research,this paper believes that China’s special national conditions and the adventurous spirit of the military have played a role,which may lead to military executives pushing their companies to make more M&A decisions and pay higher amounts.The company’s performance fluctuates more but its performance is better.Since past research has not clearly defined the so-called military executives,this paper attempts to give a clear definition of military executives on the basis of the author’s personal experience and literature.Company executives who have served in the military and their affiliated organizations and entered the company after retiring from the military.Then,this paper collects the M&A data,company characteristic data and executive personal characteristic data of Chinese A-share listed companies in Shanghai and Shenzhen from 2006 to 2020,and strictly processes the obtained data.In terms of empirical research,this paper adopts multiple linear regression model and Logit model,etc.,and tests the robustness of the results by propensity matching score and shortening the sample time interval.Finally,this paper reaches different conclusions from previous studies: First,the military chairman pushed the listed company to make more M&A decisions and spent more funding of mergers and acquisitions,but the military manager did not have a significant influence on the merger and acquisition of listed companies.Second,different from previous studies,military executives significantly reduce the stock performance volatility of listed companies after mergers and acquisitions,but military executives have no significant impact on accounting performance fluctuations of listed company mergers and acquisitions.Third,military chairman Significantly positive stock performance was created in the first year after the merger of listed companies,but significantly negative accounting performance was created in the second year after the merger of listed companies,which contradicts the conclusions of previous studies,and further research is needed in the future.Fourth,compared with non-military chairman,military chairman prefers to acquire asset targets,and prefer to carry out other types of mergers and acquisitions.Based on the above conclusions,this paper gives the following suggestions: First,listed companies should fully grasp and reasonably apply the strengths of military executives’ personal characteristics such as emphasis on honor and responsibility,and daring to take risks.And at the same time they should strengthen education,training and organizational management to achieve effective company value.Second,functional departments such as the Department of Veterans Affairs should provide veterans with targeted knowledge presentations and skills training,so that veterans can better adapt to the rapidly developing and changing business market,and give full play to state-owned enterprises,especially the central enterprises where it is the channel advantage of central enterprises to absorb and resettle veterans;thirdly,veterans,especially military executives,should take the initiative to strengthen knowledge learning and personal ability improvement,and continue to give full play to the loyalty,bravery,sacrifice,dedication,and charge of the soldiers.