The Influence Of Asset Pricing Errors On Mergers And Acquisitions

With the improvement of China’s capital market,the development of the mergers and acquisitions and reorganization markets has also been booming.The reform of equity in 2005 has made a profound change in the operation of China’s capital market.It also produced a huge promotion effect.According to the statistics of the CSMAR M & A database,we find out that the M&A activities of China’s capital market increased from 8 to 10299 between 1995 and 2021.It can be seen that China’s corporate mergers and acquisitions are flourishing with the market-oriented trajectory.Within China’s market background,how the capital market affects corporate mergers and acquisitions has important theoretical significance and urgent practical needs.This paper uses the fixed PB ratio decomposition model,conduct a in-depth research on the influence mechanism of asset pricing errors on corporate mergers and acquisitions in China’s capital market.Specifically,this paper uses the mergers and acquisitions of Chinese A-share listed companies in 2012-2021.To examine whether listed companies tend to initiate mergers and acquisitions when the stock price is overestimated in order to increase the valuation of the stock;further,this article conducts heterogeneity analysis from the three dimensions of information asymmetry,financing constraints,and whether it is the extremely harsh market environment.Finally,this article studied corporate management in mechanism analysis.The intermediary effect of the shareholding ratio.The above research provides the theoretical basis for asset pricing in the corporate mergers and acquisitions decision-making,and at the same time,it deepen the understanding of excessive valuation theory and signal theory,and enrich the related research of China’s capital market and corporate mergers and acquisitions.The conclusions obtained by this empirical research are as follows:First of all,listed companies are more willing to initiate mergers and acquisitions when the stock price is underestimated,and the frequency of mergers and acquisitions will also be higher.It proves that the interpretation of the relationship between asset pricing and corporate mergers and acquisitions will be more in line with my country’s capital market.The formula mergers and acquisition mechanism is only reflected in the situation where corporate value is undervalued at its industry level.Second,the environment of signal transmission will significantly affect the motivation of the company’s initiative to initiate signal mergers and acquisitions.Specifically:(1)Enterprises with higher information asymmetry will initiate signal mergers and acquisitions more;(2)Enterprises with relatively low financing constraints will initiate more signal mergers and acquisitions.However,due to financing constraints mainly on the company’s own level,the market environment in my country is mainly the industry level pricing error-driven signal mergers and acquisitions.Therefore,the impact of financing constraints affects is relatively weak;(3)In the extremely harsh market environment.The interpretation mechanism of errors with corporate mergers and acquisitions will fail,and the logic of excessive valuation theory of stocks will take the initiative.Third,the shares proportion of listed companies in the industry level has intermediary effect on the previous mechanism.Specifically,the management will purchase strategically when the company’s stock is underestimated,and then adopt a signal mergers and acquisitions to correct the company’s valuation to complete the arbitrage.