The Research On The Economic Consequences Of The Premium Of Control Rights

Mergers and acquisitions is a common phenomenon in our country,and the control premium arising from the situation is also widespread,but the theoretical interpretation of the control premium is divided.The synergetic theory suggests that M&A can produce synergistic effect and promote the value of the firm.The premium of control predicts that the future value of the firm will increase.The private benefits of control theory argues that the premium of control represents the expectation of private benefits of large shareholders and the cost of agency.Most of the existing literatures support the second theory mentioned above,and even measure the private benefits of controlling shareholder directly with the control premium.However,the information contained in the control premium is complex and multifaceted.In China,what kind of theory is more convincing,and what kind of economic consequences will the control premium bring?This is a lack of research.In this paper,the economic consequences of the control premium are analyzed theoretically using synergistic theory,principal-agent theory,and incomplete contract theory.In this paper,we analyze the effect of control premium on the market performance and financial performance of companies which were merged or acquisited during 2000 to 2015.Then we take pre-merger performance and the nature of the actual controller after M&A as manipulative variables,multiplied by control premium,to study the moderating effects of these two factors on the economic consequences of the control premium.The main conclusions of this paper are as follows::(1)In the short term,the control premium has a positive effect on the market performance and financial performance.However,In the long run,the control premium has negative effect on the market performance and financial performance,and only the impact on market performance is significant.We find out that although the control premium eventually still serves the private interests of the large shareholders,the short-term positive effect of the control premium on firm performance is explained as a good thing.(2)After the pre-merger performance and control premium is crossed and re-tested,we find that both short-term and long-term after the completion of M&A,cross-over has a significant negative effect on market performance and financial performance,Indicating that compared to poor performance before the merger of enterprises,large shareholders tend to occupy a good performance of enterprises.(3)After the nature of the actual controller and the control premium is crossed and re-tested,we find that in the short term,cross-over has a significant negative effect on the market performance and financial performance;but In the long-term,cross-terms only have a significant negative effect on corporate market performance.The study of the economic consequences of the control premium helps to understand the agency.cost more clearly,promote the synergistic effect of M&A,and perfect the governance structure of listed companies,but also to provide theoretical support for improving the governanceefficiency and setting appropriate supervisory policies.