| Under the background of China's economy changing from high-speed growth to high-quality development,whether Mergers and Acquisitions(M?A)especially cross-industry M?A can help firms to transform,has become an important topic of concern to the academic circles and the government.The existing research shows that cross-industry M?A originates from series motives such as empire building by corporate managers,overconfidence,internal capital market and life cycle,and its performance is generally lower than that of the same-industry M?A and often gets poor market response.Contrary to the previous literature,cross-industry M?A in China can often get more positive market response.Does this mean cross-industry M?A can create higher value?The exsiting literatures mostly explained the market reaction and motivation of cross-industry M?A from the perspective of market effectiveness.Few literatures have been studied from the perspective of investor irrationality.Therefore,this dissertation explains the market response of cross-industry M?A from the perspective of irrational investors,and based on the agency costs theory of overvalued equity,this dissertation examines the catering motivation and governance mechanism of cross-industry M?A.The specific conclusions of this dissertation are as follows:(1)Adopting the event study method to measure the market response to the disclosure of M?A information and taking the listed companies of A-share which implemented major asset restructuring in 2008-2019 as the research sample,the dissertation discusses the existence and explanation of the phenomenon of cross-industry M?A market premium from the perspective of irrational investors.The results show that:Firstly,cross-industry M?A can obtain higher market response than the same-industry M?A which only exists in"hotspot" cross-industry M?A;Secondly,the higher the investor sentiment,the greater the cross-industry M?A market premium,especially the "hotspot" cross-industry M?A market premium;Third,compared with the same-industry M?A,cross-industry M?A with high market expectation does not create more cash flow for firms,but reflects lower production efficiency and higher risk of goodwill impairment;Fourthly,the cross-industry M?A market premium only exists in the period of high market sentiment and the low proportion of long-term institutional investors' shareholding.The above conclusions show that in China's capital market,cross-industry M?A market response is higher than that of the same-industry M?A(that is,there is a cross-industry M?A market premium phenomenon),and mainly originated from "hotspot" cross-industry M?A and cross-industry M?A market premium is the irrational embodiment of investors.(2)Based on the agency cost theory of overvalued equity,this dissertation takes a listed firm which implemented major asset restructuring in 2008-201 9 as a research sample,and tests whether the overvaluation of stock price affects the decision,motivation and economic consequences of cross-industry M?A,so as to discusse whether the insider represented by large shareholders will cater the irrational expectation of investors through making cross-industry M?A.The results show that:Firstly,the firms with overvalued share price are more likely to initiate cross-industry M?A especially "hotspot"cross-industry M?A.Secondly,when the level of earnings management in the last period is higher,the positive correlation between the overvaluation of stock price and cross-industry M?A is more significant,and mainly occurs in "hotspot" cross-industry M?A;Thirdly,when the motivation of large shareholders' cash-out is stronger,the positive correlation between the overvaluation and "hotspot" cross-industry M?A is stronger;Fourthly,cross-industry M?A driven by overvaluation,especially "hotspot" cross-industry M?A increases pay of M?A,reduces the total factor productivity of firms,thus increasing the possibility and scale of future goodwill impairment of firms;Fifth,only when the market sentiment is high and the cross-industry M?A premium is high,the positive correlation between the overvaluation of stock price and cross-industry M?A and "hotspot" M?A exists.The above research shows that the firms with overvalued share price will meet the investors' expectations through making cross-industry M?A especially the "hotspot"cross-industry M?A so as to maintain the overvaluation of stock price and the realization of the self-interest of major shareholders.And firms will weigh the cost and benefit of earnings management and cross-industry M?A,only when the cost of earnings management is high and the benefit of cross-industry M?A is relatively large,the firms whose share price is overvalued can maintain the valuation level of firms through making cross-industry M?A.For economic consequences,cross-industry M?A and "hotspot"cross-industry M?A driven by overvaluation will result in problems such as over-pay and poor integration,which will increase the risk of goodwill impairment of firms,thus damaging the long-term value of firms.(3)According to the importance of supervision to the protection of small and medium-sized investors,this dissertation explores the influence of inquiry supervision on the agency costs of overvalued equity from the perspective of front-line supervision of stock exchanges.Taking A-share listed companies implementing major asset restructuring in 2015-2019 as the research sample,the dissertation examines whether the inquiry letter of the exchange can identify and accurately identify the potential risks of cross-industry M?A driven by overvaluation.Taking A-share listed companies which implemented major asset restructuring in 2008-2019 as a research sample,the dissertation examines the impact of the regulatory intensity of inquiry letter on cross-industry M?A driven by stock overvaluation.The results show that:first,cross-industry M?A driven by overvaluation,especially"hotspot" cross-industry M?A is more likely to receive inquiry letter of the exchange;Secondly,cross-industry M?A driven by overvaluation,especially "hotspot" cross-industry M?A is more likely to receive the inquiry letter related to the motivation of M?A and whether it can create value;Thirdly,the supervision intensity of inquiry letter will reduce the cross-industry M?A driven by overvaluation,especially the "hotspot" cross-industry M?A;Fourth,the optimistic sentiment of investors and announcement market reaction are lower when they receive the inquiry letter.The above conclusions show that the exchange inquiry letter has the function of risk identification,can identify the potential risk of M?A catering,and the supervision of inquiry letter helps investors integrate information related to cross-industry M?A risk into the stock price,and reduces the investors' optimistic response to cross-industry M?A and "hotspot" cross-industry M?A(that is,making cross industry M?A earn profit from irrational investors).Thus,it has decreased cross-industry M?A driven by overvalued share price.The innovations of this dissertation include the following four aspects:Firstly,this dissertation enriches the research on diversification and enterprise value.The previous literature,based on market effectiveness,explains the formation of diversification discount from the perspectives of corporate governance,internal capital market efficiency,omitted variables,measurement errors,sample self-selection and so on.Based on the phenomenon of cross-industry M?A market premium in our capital market,Yang et al.(2019)explains this phenomenon from the perspective of transformation income.But the previous research is based on the assumption of market effectiveness,and the announcement effect of M?A as the measurement standard of whether M?A can create value for firms.Most of China's securities market are individual investors.Compared with the mature capital market dominated by institutional investors,natural person investors pay attention to short-term economic benefits,and lack of information ability and investment experience,and their trading behavior has obvious irrational characteristic.Therefore,it is helpful to supplement the research on the causes of cross-industry M?A market premium from the perspective of irrational investors.Secondly,this dissertation enriches the research on the motivation of cross-industry M?A.The motive theories are often closely related to empirical evidence.Scholars often discuss the motivation of cross-industry M?A which is based on the hypothesis that capital market is effective and the market reaction of cross-industry M?A.Before 1980s,based on empirical evidence that the market reaction of cross-industry M?A was significantly positive,scholars developed the theory of financial synergy(internal capital market theory,coinsurance hypothesis,etc.);With the negative reaction of cross-industry M?A market in the 1980s,scholars have turned to negative attitude towards cross-industry M?A and developed the agency theory,overconfidence theory and the theory of inefficient internal capital market.Few literatures have examined the motives of cross-industry M?A from the perspective of investors' irrationality.Based on the phenomenon of cross-industry M?A market premium in China's capital market,the domestic literature finds that cross-industry M?A is the transformation demand of poor performance firms from the market effectiveness perspective,and cross-industry M?A market premium is the capitalization of firm enterprise transformation income.Considering the structure of investors in China's stock market and the decision-making habits of small and medium-sized investors,this dissertation reveals the catering motivation of cross-industry M?A from the perspective of overvaluation.Thirdly,this dissertation enriches the research on the agency costs of overvalued equity.Jensen(2005)first proposed the agency costs of overvalued equity.When the stock price is in the state of overvaluation,managers often have strong motivation to manage earnings and make M?A so as to meet the investors' expectations and maintain short-term stock price.The research on agency costs of overvalued equity mainly focuses on the aspects of overvaluation and earnings management.The literature on overvaluation and M?A mainly focuses on the test of the hypothesis of stock market driven M?A proposed by Shreifer and Vishny(2003).The hypothesis is verified by examining the relation between overvaluation and payment method of M?A and the economic consequences of stock payment.Based on the fact that mature capital market has negative reaction to M?A announcement,the existing literature lacks systematic test of the agency costs of overvalued equity in the background of M?A.Based on the phenomenon of cross-industry M?A market premium,this dissertation systematically tests the existence,motivation and governance mechanism of the agency costs of overvalued equity from the perspective of cross-industry M?A and "hotspot" cross-industry M?A.Fourthly,this dissertation enriches the research on the regulatory effectiveness of inquiry letters.Because of the imperfect legal enforcement mechanism,limited role of independent directors,minority shareholders' voting rights and other mechanisms,the active law enforcement of government regulatory agencies is an important mechanism to regulate the behavior of micro subjects.The current research on the effectiveness of inquiry letter mainly focuses on annual report inquiry,less attention to the role of restructuring inquiry.This dissertation finds that the restructuring inquiry letter supervision can effectively play the role of risk warning and protect the rights and interests of small and medium-sized investors.Therefore,this dissertation enriches the issue of the effectiveness of government supervision and expands the research on the protection mechanism of small and medium-sized investors. |
PDF Full Text Request