High-Tech Corporate CEO Overconfidence, M&A And Performance

With the speeding up of the global economic integration and the deepening of reform and open up, M&A has become one of the important means to achieve a high-tech enterprise external expansion, technology acquisition and the core competitiveness promotion. In 2013, the Chinese enterprises M&A present explosive growth situation, for example, there are 1232 M&A in 2013, up 24.3% from a year earlier, of which the overseas M&A grow by 30%, creating a new record. But both worldwide and domestic M&A, the success rate of M&A is very low, there are many reasons for the failure. Studies have shown that the main cause of the failure of the M&A is that CEOs are not fully in consideration and use of "human" factor during the process of M&A.From the perspective of SAB theory, on the basis of previous related literature and investigating Chinese high-tech companies’CEOs M&A history from 2008 to 2012, this paper put forward three hypothesis according to the relationship of CEO overconfidence, M&A and performance, and at the same time build the theoretical models about the relationship of CEO overconfidence and M&A performance. On this basis, this paper research 180 Chinese high-tech CEOs’M&A history in 2008-2012, obtained 900 samples, then carry on the quantitative analysis of the sample datas with statistics software STATA 11.0 and SPSS20.0, so as to verify the hypothesis, and draw the conclusions to provide guiding significance for the further research direction.The empirical results show that:①There is significant positive relationship between CEO overconfidence and M & A.CEOs’first successful deals exhibit positive announcement effects for companies while their subsequent deals exhibit negative announcement effects, in other words, the long-term performances of M&A companies are negative;②on the basis of the successful M&A, the acquisition likelihood of M&A increase, the companies which exist frequent M&A have a smaller announcement effects, and previous positive performance does not curb the negative wealth effects associated with subsequent deals;③Compared with the companies which exist rational CEO, there are worse performance in the companies which exist overconfident CEO; On the other hand, compared with infrequent acquirers, frequent acquirers have less corporate performance. Most of the assumptions are validated effectively by empirical results.