Research On Frequent M&A Companies Under The Bounded Rationality Perspective

Mergers and acquisitions can realize the scale expansion, enlarge the market share and raise public awareness in a shortest time. Along with the development of economy and society, more and more enterprises take mergers as the strategic way to make their company bigger and stronger. The hundred years history of western mergers makes us believe that merger has become an activity which can influence the national and international economy and no longer an enterprising operations.The frequent merger and acquisition, defined as the operation that a company conducts mergers frequently in a short time, it occurs widely in the capital market around the world. And it also aroused the notice and research by western scholars. In the last two years, the scholars decide to start their research from the company decision makers. Some of them think that the decision makers of the frequent merger and acquisition company have an over-self-confident tendency, and some other scholars found that the operations of the decision makers are in accordance with the learning effect. For the emergence and fast growing of the frequent merge and acquisition in the A-share market along with the development of our capital market, the research of the frequent merger and acquisition in our capital market undoubtedly has the realistic and theoretical significance.In this essay, my research start from the long-term operating performance of the frequent mergers and acquisitions company and behaviors of companies’decision-making. Taking the frequent mergers and acquisitions companies’of China’s A-share market as sample, on the basis of theoretical analysis, if there is overconfidence hypothesis and learning effect in the empirical research companies’decision-making.This essay make a theoretical analysis towards frequent mergers and acquisitions of listed companies in the decision-making behavior, I designed two hypotheses, Firstly, the existence of learning effects in frequent mergers and acquisitions companies’decision-making,. Secondly, the existence of overconfidence tendency in frequent mergers and acquisitions companies’ decision-making. And then I selected the frequent mergers and acquisitions companies’of China’s A-share market of2002-2008as a research sample, meanwhile, I set up a reference sample. This essay adopt a more comprehensive Balanced Scorecard to measure the companies’ performanceInstead of financial indicators method. In order to make the Balanced Scorecard applies to this study, I improved the original four dimensions of the Balanced Scorecard by referring the previous studies. I used the multivariate statistical analysis of principal component factor in the empirical analysis, and built a composite score model k. Finally, I gave a detailed analysis to the empirical results for testing the above two hypothesesThis study found that in the first year the frequent mergers and acquisitions company drop sharply in performance after the end of frequent mergers and acquisitions. In addition, in the previous year when the frequent mergers and acquisitions companies launched for merging and acquiring for the first time, the company’s performance is significantly higher than that in the reference sample company. From the above two points, this paper considers that the decision-makers of the frequent mergers and acquisitions companies’have an overconfidence tendency. At the same time, the study found no clear support for the evidence of learning effects in the decision-making.Based on the findings, this essay made some policy recommendations respectively to the listed companies, investors and M&A regulators at the end of this article.