Study On Frequent Acquirers Of Chinese Listed Companies

"Frequent Acquire" refers to the behavior of making many M&A deals in a short period.As more and more listed companies consider M&A to be an important strategy for capital operating and industry integrating,Frequent Acquire phenomenon is found in capital market of many countries,the study of this behavior has become a hot topic in M&A research.After a overall review of relative studies on Frequent Acquire,this paper proceeds from the effect of manager behavior on the decision-making about M&A under China special economy and capital market structure,combines with short-term market response and long-term financial performance,and constructs a research framework to study Frequent Acquire behavior of Chinese companies.The purpose of this paper is to make an objective assessment of Frequent Acquire behavior,and provide a reference for listed companies,investors and regulators.The researching sample of this paper consists of 50 companies which made at least 3 M&A deals in 3 years between the period of 2002-2006.The empirical results show that managerial over-confidence is an important driving factor of Frequent Acquire,in another word,over-confidence managers overestimate their ability to select high synergy targets,and underestimate the risk of integration after M&A, which enables them to take Frequent Acquire.The evidences of managerial over-confidence are as follows:First,the Wealth Effect of M&A announcement presents a negative trend that the higher the acquisition order,the worse the effect of M&A announcement.Secondly,the long-term financial performance of Frequent Acquires takes on a clear downward trend after the behavior of Frequent Acquire.Thirdly,self-attribution bias exists in the management of Frequent Acquire finns,market reaction and financial performance of their first M & A is much better than the subsequent deals.There is no evidence in empirical results to support learning hypothesis,which indicates that learning effect of frequent acquires managerial is very weak,or does not exist.