The Influence Of Executives’ Overconfidence On M&A Performance

Mergers and acquisitions is one of the important ways for enterprises to achieve transformation and expand their scale,and the effect of mergers and acquisitions can be reflected by the performance of enterprises after mergers and acquisitions.However,many studies and facts have proved that the performance of mergers and acquisitions in my country is not ideal,failed to meet expectations,and even mergers and acquisitions activities.lead to losses for the business.At the same time,the popularity of mergers and acquisitions among Chinese enterprises is continuing to rise,and the number of mergers and acquisitions is increasing at an annual rate of 70%.Managers expect to increase corporate value through mergers and acquisitions decisions.Therefore,how to improve the performance of corporate mergers and acquisitions and improve the low efficiency of corporate mergers and acquisitions is very critical,and relevant research is urgently needed for analysis.Researchers have found that managers often exhibit irrational behaviors such as overconfidence in the decision-making process.Under the background of the hot M&A market,whether the M&A decision can achieve the expected effect is of great significance to the development and expansion of many enterprises.Therefore,this thesis selects the most common cognitive bias of managers:managerial overconfidence to study its relationship with corporate M&A performance.In terms of curbing managers’ overconfidence,this thesis selects the company’s external governance factors:analyst attention,media attention,government intervention,economic development level and legal protection level.A moderating effect analysis was performed.Take listed companies in mergers and acquisitions from 2010 to 2020 as the research object.The manager’s overconfidence measurement method selects the manager’s relative compensation index;the M&A performance is measured by the short-term excess cumulative return and the change value of the financial performance in the previous year and the previous year.This thesis analyzes the relationship between managerial overconfidence and corporate M&A performance through hypothesis reasoning,model building and empirical testing,and whether external corporate governance has a moderating effect on these two factors.Concluded as follow:First,there is a significant negative correlation between management overconfidence and corporate M&A performance.The psychological cognitive bias of managers’ overconfidence will adversely affect M&A performance;econdly,corporate external governance plays an important regulatory role in curbing the negative relationship between managers’ overconfidence and M&A performance.Therefore,it is necessary to improve the company’s external governance level and curb the overconfidence of managers,so as to improve the overall level of corporate M&A performance.