A Study On The Impact Of Management Power On Mergers And Acquisitions Efficiency

With China’s capital market continuing to be mature, and the increasing of china’s corporate agency cost, management power of enterprise continues to increase. However, according to scholars in the past studies have shown that executive compensation does not enhance with the increase of management power, but directly related to firm size, this kind of non-equivalence of power, responsibility and benefit stimulate management’s opportunistic motives, management have a big incentive to use its powers to carry out frequent, large-scale M&A expansion. This article aims use M&A theory and property rights theory to excavate the impact of management power on M&A efficiency, and then make recommendations for improvement, from the perspective of corporate governance.In this dissertation,820A-share listed companies were selected as study subject in which mergers and acquisitions occurred between2007and2009. We first studied the relationship between the management power and M&A activity, and then studied the impact of management power to M&A efficiency, besides, based on the nature of property right corporate classification, this dissertation further studied the differences of M&A efficiency cause management power, between state-owned listed companies and private listed companies. It is found that, management power has a significant positive correlation with the number as well as the scale of mergers and acquisitions; this indicated that management enjoyed bigger power and more likely to promote M&A activities. In this paper, we use factor analysis method on the evaluation of long-term and short-term M&A efficiency, it showed that apart from the sample of2007has past the short-term significant test, samples in the rest of the years have not past the long-term and short-term M&A efficiency test, which shows the current mergers and acquisitions in China cannot effectively improve the financial performance of the enterprise. Further studies showed that management power is negatively related to corporate long and short-term M&A efficiency, indicating that management power promotes M&A activity while overlooking the company interests which resulted in low efficiency of mergers and acquisitions. In addition, according to the state-owned listed companies and private listed company two groups of samples, the management authority to the efficiency of mergers and acquisitions empirical results show that, in state-owned listed companies, management power and short and long term M&A efficiency has a more significant negative correlation, while in private listed companies, management power has a negatively but not significant relationship with long and short-term M&A efficiency, this indicated that management of state-owned listed companies easier to utilize big power to carry out opportunistic investment activities, and thus more likely to lead to low efficiency.Finally, this article suggested that, we should give full attention for management opportunism M&A activities in the future, and focus on improving the corporate governance structure, strengthening the free competition of managers market to prevent self-serving behavior of management, in addition, we also should complete the M&A information disclosure system.