| The capital market has been founded and the economy has rapidly developed since theend of last century, M&A activity gradually rise. As one of the main ways of enterprises’expansion, M&A activity has been developing continuously and showed the trend ofintensified. M&A activity can make the enterprises get more allocation of resources and rapidexpansion of scale, so the enterprises can get rapid increase in the market competitiveness.But not all of the M&A activities are successful and effective, there are many factors impactthe success of the M&A activity. M&A payment is the last step, as well as the most importantstep of M&A activity. So the correct selection of payment-method affects the company’sperformance and operating conditions. So how to choose the M&A payment-method isalways an important issue in the process of M&A. There are many factors can influence thecompany’s M&A payment-method, such as the company’s financial leverage, free cash flow,company size, payment amount and so on. But with the deepening research on M&A, manyscholars deem that these factors are not able to fully explain the payment-method options ofcompany. In the recently years, more and more experts started from the perspective ofbehavioral finance, to study the managers’ individual behavior how to influence M&Apayment-method. Their study found that in the process of M&A, managers’ overconfidence isa widespread phenomenon. They always overestimate their own judgment ability andoptimistically think they can completely control the condition of the company and know theeconomic environment information. They also underestimate the risk of M&A and chose theuntimely payment-method of M&A, which leads to mistakes during M&A decision-making.Based on this, this paper makes the phenomenon that listed companies’ managers arealways overconfidence as a breakthrough point to study this phenomenon how to affect thepayment-method in the process of M&A. Data of this paper is from the database of CSMARand WIND database. This article selects A-share listed companies which had M&A activity inChina during2010-2012as the research sample, and make a empirical research for therelationship between M&A payment-method and overconfidence managers of listedcompanies in China.The study shows that:(1) in the process of M&A, the phenomenon that managers whowork in listed companies are always overconfidence is widespread, and the overconfidencemanagement deeply influences the company’s M&A decisions.(2) Overconfident managers tend to overestimate benefit of M&A and their own judgment ability, underestimate the riskof M&A. They believe that outside investors underestimate the value of the company, so inthe process of M&A, overconfident managers tend to cash payment. |
