The Impact Of Institutional Investors On Shareholders Wealth Effect Of Overseas M&A Corporations

Institutional investors,as important investment forces in financial market,are produced by conforming to social change and economic environment changes.They play an important role in the economic development.Aggregate holdings of institutional investors in A-share listed companies reached 2.573685 trillion till the first half of 2016,which account for 48.18% of all A shares.Overseas M&A of Chinese enterprises is similar to a rising wind and scudding clouds due to development of institutional investors and smooth financing channel.Chinese enterprises seize the opportunity,actively seek and explore seriously undervalued high-quality assets in the worldwide scope under guidance of a series of policies,such as ‘One Belt,One Road',‘Made in China 2025',etc.Such assets are recombined and integrated with China's assets and market.China became the country with the largest global M&A amount instead of the United States in the first three quarters of 2016.It indicates that China overseas M&A have entered a brand-new stage of rapid development.More and more institutional investors participate in overseas M&A of Chinese enterprises by the capital,information and resource advantages for their own interests under the background.Therefore,the research on the influence of institutional investors on shareholder wealth effects of overseas M&A enterprises has important theoretical and practical significance.In this thesis,we found through the relevant literature reviews that,most of the existing researches on shareholder wealth effects of overseas M&A enterprises were based on enterprise or country perspective rather than the perspective of institutional investors.In this thesis,the principal-agent theory is introduced to construct the theoretical framework of the institutional investors' influence on shareholder wealth effects of overseas M&A enterprises from the brand-new perspective of institutional investors with overseas M&A events as the core and logical starting points and shareholder wealth effect as the goal of consideration.The influence of institutional investors' holding behaviors,trading behaviors and positive behaviors on shareholder wealth effects of overseas M&A from two levels which are short term and long term.The influence mechanism and transmission paths of the institutional investors on shareholder wealth effects of overseas M&A enterprises are revealed,which is also beneficial for enriching the theoretical connotation of overseas M&A.In this thesis,the research system of shareholder wealth effects of overseas M&A enterprises is constructed from two levels;short term and long term.The shareholder wealth effects of overseas M&A enterprises are investigated more comprehensively and systematically.In addition,the influence of realistic factors is further considered in this study;thereby the research results are more credible.The following factors are considered from the short-term perspective,for example China's capital market presents semi-strong form efficiency,capital market system is not perfect,etc.Overseas M&A information may be leaked in advance.In this thesis,the study window period is increased to 41 days.Three window periods of [-20,-1],[2,20] and [-20,20] are increased in addition to conventional window periods.The research results show that the overseas M&A enterprises actually have the phenomena of share price changes before and after the announcement day of overseas M&A events.It is obvious that Chinese enterprises have short-term shareholder wealth of overseas M&A.In addition,the influence will be weakened with prolonging of window periods.The BHAR model can be further optimized from the long-term level,the enterprise scale and BE/ME are regarded as the classification basis for dividing into two dimensions,a total of 25 groups.The effect caused by these two factors is eliminated;thereby the research results are more accurate.Research results show that overseas M&A of Chinese enterprises do not lead to shareholder wealth effect.As for the next focus of this thesis,the behavioral finance theory is introduced to relax the original hypothesis of rational economic man.The trade behavior of bounded rationality institutional investors is included into the consideration system.The microscopic dynamic behavior characteristics of institutional investors are fully revealed.The research system of institutional investors' holding behaviors and trading behaviors on short-term shareholder wealth of overseas M&A enterprises is constructed.The institutional investors' holding proportion and institutional investors' holding change proportion are selected as the proxy variables.The influence of institutional investors' behaviors on short-term shareholder wealth effect of overseas M&A enterprises is investigated comprehensively.The research results show that the institutional investors have higher holding proportion,the short-term shareholder wealth effect of overseas M&A enterprises is better;the holding proportion change of the institutional investors before and after the announcement day of overseas M&A events is higher,and the short-term shareholder wealth effects of overseas M&A enterprises is worse It is obvious that China's securities market has ‘risk compensation effect'.In this thesis,Brickley's study is adopted as reference.Institutional investors are divided into pressure sensitive investors and pressure resistance investors.The shareholder wealth effect of heterogeneity institutional investors on overseas M&A enterprises is included into the research framework,thereby making up for deficiency of the existing research.Research results show that the pressure resistance institutional investor holding behaviors have reverse influence with short-term shareholder wealth of overseas M&A enterprises.The short-term shareholder wealth effect of overseas M&A enterprises is weakened by the holding proportion changes of the institutional investors.The sensitive institutional investor holding behaviors have positive influence with short-term shareholder wealth of overseas M&A enterprises.The short-term shareholder wealth effect of overseas M&A companies is increased by the holding proportion changes thereof.It is obvious that the influence of different institutional investors on short-term shareholder wealth effect of overseas M&A enterprises is heterogeneous.Finally,in this thesis,the shareholder activism of the institutional investors is included into the research system of long-term shareholder wealth effect of overseas M&A enterprises.OLS and 2SLS measurement models are constructed in order to avoid the endogenous problem.The research results show that the total holding proportion of China's institutional investors has no significant correlation with long-term shareholder wealth of overseas M&A companies.Pressure resistance institutional investors and pressure sensitive institutional investors do not have significant influence on long-term shareholder wealth of overseas M&A companies.It is obvious that China's institutional investors do not reach the effect of enterprise governance generally.Meanwhile,different holding proportions of different institutional investors also can affect long-term shareholder wealth of overseas M&A enterprises.In the thesis,the influence is further studied deeply.The results show that the high holding proportion of brokers,banks and non-financial institutions has a negative correlation relationship with long-term shareholder wealth of overseas M&A enterprises.On the contrary,the high holding proportion of China's trust and financial institutions has a positive influence on long-term shareholder wealth effect of overseas M&A enterprises.It is obvious that the influence of different institutional investors' holding behaviors on long-term shareholder wealth effect of overseas M&A enterprises is different.Finally,the results of the empirical study are combined for proposing policy suggestions to healthy and orderly development for the Chinese institutional investors on the basis of related theories of institutional investors in this thesis.