The Research On The Merger Premiums Based On Management Incentive

In modern corporate management, as the separation of ownership and control, there is an agency relationship between owner and manager. In the premise of information asymmetry, corporate managers are facing ethical risk and adverse selection, which lead to agency cost. Management incentive system can effectively alleviate the problem. With the rapid development of Merge&Acquisition in recent years, research about the relationship between management incentive system and Merge&Acquisition become hot point, as well as the relationship between management incentive and acquisition premium in bidding company.The article make a discussion about whether the degree of management incentive have an influence on the acquisition premium paid for bidding company. We use empirical method, target1437public listed companies in A-share market in the period of2008-2012, making a research about the correlation between management incentive and acquisition premium. The result shows that management incentive has been found a correlation with the profit of bidding company brought by M&A. Combination of director and manager positively affect acquisition premium, proportion of management shareholding negatively affect acquisition premium, the sum remuneration of top3managers affect acquisition premium insignificantly. All these are in consistent with previous scholar research conclusions, and our empirical result supports imperfect agency theory. There are also some evidences indicate that management in bidding company will negotiate with target company in order to achieve lower purchase price. Not only certify the positive impact of management incentive system, but also accept the competence of manager. Thus establish an initiative role for manager in management incentive.