Research On The Impact Of Equity Incentive On Enterprise Mergers And Acquisitions

Merger and acquisition(M&A)and restructuring are important means for enterprises to optimize resource allocation and structural upgrading and transformation.Successful M&A activities can bring considerable economic benefits to both parties,while failed M&A activities not only fail to produce expected synergistic effects,but also cause resource waste and affect the normal operation of enterprises.The success or failure of enterprise merger and acquisition decisions largely depends on whether the management’s merger intention is considered from the perspective of the enterprise or itself;Equity incentives,as a long-term incentive system to alleviate agency issues in enterprises,are more effective in influencing management’s long-term investment decisions compared to traditional monetary compensation;With the continuous increase of shareholding ratio,institutional investors in China have become important external participants in corporate governance,capable of exerting significant influence on the behavior of management.The prevalence of equity incentive systems and the development of institutional investors often coexist in listed companies in China.Therefore,it is of great practical significance to explore the comprehensive impact of internal incentive measures and external market supervision on enterprise merger and acquisition decisions and long-term merger performance from the perspectives of equity incentives and institutional investors.Using the panel data of listed companies in China from 2009 to 2021,this thesis takes equity incentive,institutional investor shareholding and corporate mergers and acquisitions as the main research subjects,and based on the theory related to compensation incentive and corporate mergers and acquisitions,respectively studies the impact of equity incentive and institutional investor shareholding on corporate mergers and acquisitions decisions and long-term mergers and acquisitions performance,and further explores the relationship between the three with institutional investor shareholding as a moderating variable,And based on the heterogeneity of institutional investors,stable institutional investors and transactional institutional investors are distinguished to analyze their differentiated impacts.The final conclusion is as follows:(1)Equity incentives can promote the occurrence of enterprise merger and acquisition decisions,that is,the stronger the intensity of equity incentives,the more inclined the enterprise is to implement merger and acquisition activities.(2)The intensity of equity incentives is significantly negatively correlated with the long-term M&A performance of enterprises,that is,the greater the intensity of equity incentives,the worse the long-term performance of enterprises after implementing M&A activities.(3)Institutional investor shareholding can suppress the occurrence of corporate merger and acquisition decisions,that is,the higher the proportion of institutional investor shareholding,the less inclined the enterprise is to implement merger and acquisition activities.(4)The shareholding of institutional investors is significantly positively correlated with the long-term M&A performance of enterprises,that is,the higher the shareholding ratio of institutional investors,the better the long-term performance of enterprises after implementing M&A activities.(5)In the presence of equity incentives,institutional investors’ shareholding will promote the occurrence of mergers and acquisitions decisions and reduce the long-term performance of enterprises after mergers and acquisitions.Further distinguishing the heterogeneity of institutional investors,it was found that this phenomenon is mainly caused by transactional institutional investors.In the presence of equity incentives,transactional institutional investors significantly promote the occurrence of corporate merger and acquisition decisions compared to stable institutional investors,reducing long-term performance after corporate mergers and acquisitions.This thesis focuses on equity incentives and corporate mergers and acquisitions,while introducing the external governance perspective of institutional investors to explore the internal connections between the three.This enriches research results in related fields and provides some inspiration for the selection of subsequent research ideas.At the same time,it also provides empirical evidence for enterprises to improve salary incentive systems and the government to optimize the structure of institutional investors.