Research On Merger And Acquisition Behavior Of Listed Companies Under The Control Of Ultimate Shareholders

Merger and acquisition is an strategic decision for a company to adapt to the changing market environment in order to improve its operation and expand its business scope.It is also an important way to optimize the allocation of capital market resources.Looking at the economic activities of mergers and acquisitions in the world,there have been five waves of mergers and acquisitions in the western capital market,The Sixth Wave of mergers and acquisitions has continued to today,The mergers and acquisitions market in China started relatively late.Since 1993,the "Baoyan storm" started the first case of mergers and acquisitions of listed companies in China.and then mergers and acquisitions have increased year by year,by the end of 2017,the amount of M&A disclosures announced in China's M&A market up to $537 trillions of dollars.M&A activities have become an important tool for China's capital market to support the development of real economy and enhance the international competitiveness of listed companies.From the acquirer's point of view,M&A will not only affect the company's cost and benefit of capital,but also reorganize the company's ownership structure.In the process of M&A,the decision-making of various transaction(selection and valuation of the target company,financing and payment methods of M&A,etc.)may affect the fluctuation of the acquirer's share price,and even affect the success of M&A.Pyramid ownership structure is particularly common in Listed Companies in China,The separation of ultimate shareholder control rights and cash flow rights provides a hidden condition for encroaching on the interests of small and medium-sized shareholders,In addition,the information asymmetry in China's capital market is still serious,and the ineffective environment in the external market indirectly increases the more room for self-interest motive of decision-makers.So,will the ultimate shareholders use "tunnel excavation" to encroach the interests of minority shareholders by M&A activities? Will other decision-makers under the control of ultimate shareholders make more self-interest choices in M&A? In order to explore these problems,this paper traces back to the top of the company's equity control chain.From the perspective of corporate governance,this paper studies the influence mechanism of decision-makers under the ultimate shareholder control on M&A possibility,M&A investment expenditure and M&A payment method,and reveals the internal factors affecting the M&A behavior of Listed Companies in China at the micro level.The main conclusions of this paper as follows:1.Under the pyramid ownership structure,ultimate shareholders can generally realize the relative control rights of the company.The listed companies with separation of cash flow rights and control rights.The relationship between ultimate shareholders' control rights and possibility of M&A is inverted U-shaped,The degree of deviation of ultimate shareholders' two rights is negatively related to possibility of M&A;secondly,Under the control of ultimate shareholders,the level of executive shareholding is positively correlated with possibility of M&A,and it is more significant under the separation of two rights.When the ultimate shareholder is the government,the relationship between the ultimate shareholder control right and possibility of M&A is U-shaped without separation of two rights,but in the state-controlled listed companies with separation of two rights,There is no significant correlation between ultimate shareholder control right and possibility of M&A,which indicates that the direct shareholding of listed companies by government shareholders has a stronger impact on possibility of M&A,However,under the pyramid structure,the influence of government shareholders on M&A activity is weakened.In addition,under the control of government ultimate shareholders,the influence of executive on possibility of M&A is significant,indicating the separation of two rights may lead to the serious phenomenon of "insider control" in the company,which will lead to a new principal-agent problem between the executive and the ultimate shareholders.2.From the results of the impact on M&A investment expenditure,empirical research shows that when there is separation of two rights in listed companies,the proportion of ultimate shareholders' control rights is positively correlated with M&A investment expenditure,the equity balances of other shareholders are negatively correlated with M&A investment expenditure;when the ultimate shareholder is the government,the degree of separation of cash flow rights and control rights of government shareholders is positively correlated with the M&A investment expenditure,which indicates that the government may have some political interference on the scale of M&A of listed companies,compared with the private-controlled listed companies,when the political cost problem is inevitable,government-driven mergers and acquisitions tend to be larger.3.When analyzing the influencing factors of M&A payment method under the control of ultimate shareholders,this paper finds that the greater the deviation between ultimate shareholders' cash flow rights and control rights,the more prefer stock payment.With the further increase of the proportion of ultimate shareholders' cash flow rights,the "convergence of interests" effect will play a leading role,to guard against dilution of control rights,the less prefer stock payment;secondly,the higher the proportion of executive under the control of ultimate shareholders,the more prefer mixed payment rather than stock payment in M&A transactions,but the government as the ultimate shareholder is prefer stock payment.The innovations of this paper are mainly in the following aspects: Firstly,the conclusion of this paper proves that the existence of transmission mechanism: decision-makers of M&A of Listed Companies in China influence M&A behavior through the ultimate ownership structure.this paper focuses on the M&A transaction process(including possibility of M&A,M&A investment expenditure and M&A payment method),integrating the merger and acquisition transaction process into a unified framework,at the same time,using the LLSV(2002)model on controlling shareholders and corporate value,this paper studies the characteristics of M&A behavior under the control of ultimate shareholders through empirical tests from the perspective of ultimate shareholder control;Secondly,it deeply analyses other stakeholders in multi-level principal-agent relationship under the control of ultimate shareholders,including the selection mechanism of executives and other major shareholders in M&A transactions,at the same time,we introduce the ultimate shareholder's separation of two rights into the model,and test the impact of executive shareholding and equity balance on merger and acquisition decision-making of listed companies under the condition of separation of two rights and no separation of two rights by grouping comparison,which expands the explanatory ways of influencing merger and acquisition behavior of listed companies under the framework of corporate governance;Finally,this paper innovatively finds that the ultimate shareholders of the government have different choices on the decision of M&A possibilities between they have the separation of two rights and not,and prefer to choose stock payment.It shows that M&A activities of state-owned listed Companies will be affected by the differences of the ultimate ownership structure and nature.The conclusion of this paper enriches the relevant theories of ultimate shareholder control and corporate mergers and acquisitions,extends the research field of corporate mergers and acquisitions in the past literature,helps small and medium-sized investors to correctly view the mergers and acquisitions of listed companies from the perspective of corporate governance and invest rationally,at the same time,it provides a theoretical basis for perfecting the governance mechanism in line with the actual situation of the ownership structure of Listed Companies in China,it also provides a reference opinion for the relevant regulatory departments of capital market in China to restrain listed companies from launching "flirtatious" ? "valuation arbitrage" ? "high premium" mergers and acquisitions et al.,further promote benign operation of the merger and acquisition market,and improve the reform system and rules of mergers and acquisitions of listed companies.