An Empirical Researc On The Influence Of Managerial Overconfidence On The Corporate Merger Performance

Merger and acquisitions, as the one of the principal ways for rapid expansion of enterprises, play an important role of capital circulation and adjustment of industrial structure. With China’s economy is in transition period for a high-speed development, the characteristic of manager’s overconfidence is particularly obvious. Hence, the research about the mergers of Chinese companies considering the managerial overconfidence to be applied into will obtain more guiding significance and practical significance. This article focuses on the relationship between managerial overconfidence and M&A performance, whether the managerial overconfidence of listed companies in China lead to inefficient M&A activities. This paper also discuss whether the characteristics of corporate governance and financial conditions can influence the relationship between managerial overconfidence and M&A performance, then give the suggestions to solve the problem.The paper has four main parts. The first part referring to Chapter Ⅰ mainly mentions the introduction of this paper. The second part is the Chapter Ⅱ and mainly introduces the related theories involved in the paper. Firstly, introduce the theories about merger motivation and performance, briefly review the different theoretical research on domestic and international M&A activities, and review the literature of measuring the merger performance. Finally, take the research on the influence of overconfidence on M&A, and build the foundation for latter research.The third part, including Chapter Ⅲ, Chapter Ⅳ and Chapter Ⅴ, is the core part of the paper. Chapter Ⅲ take the rational analysis on the theoretical and empirical research about the new alternative indicators for the managerial overconfidence. Chapter Ⅳ is the theoretical analysis and assumptions, on the basis of the second part with the China’s national conditions and the relevant theoretical research, take the theoretical analysis and form the proposition of this article assumes. Chapter Ⅴ is the empirical part in this paper. Be based on the finance viewpoint of behavioral corporation, an empirical research about the managerial overconfidence in Chinese listed company to acquisition performance is carried on with company samples listed between2005and2009in Shanghai and Shenzhen Stock Exchange. The conclusion shows that the manager’s overconfidence is strongly negative relativity with the acquisition performance. In other words, managerial overconfidence is an important cause leading to merger activity and has significant influence on merger performance.The last part of this paper includes Chapter Ⅵ. In this chapter, based on conclusions of the empirical study from the second part, we give some policy proposals on how to supervise the manager’s overconfidence. Moreover, we look forward to the research for the future on this topic.