Geography Peer Effect In M&A Decisions Of China's Listed Companies

Peer Effect is a theoretical concept of social psychology,which suggests that an actor's behavior will be influenced by its peers.The peer effect in financial decisions is a new topic concerned by scholars of finance,and the literature about peer effect in M&A decision is rare.The Peer Effect study expands the traditional corporate finance research,and no longer sees the company's financial behavior as the result of the company's independent decision-making,and examines the impact of Peers on its decision-making behavior from a new perspective.Using the sample of A-share listed companies from 2011 to 2016,this article investigates into the geography peer effect in M&A decisions.Through descriptive statistics,it is found that there are significant regional differences and regional convergence in M&A of China's listed companies,which provides the regional covariance for M&A research environment.Then we use the theoretical analysis and empirical test to investigates the "existence","internal law" and "external market environment impact" of the Peer Effect.The results show that the geography peer effect in M&A decisions of China's listed companies is really exist,which means that the M&A decision of a firm will be affected by its geography peers.This paper also discloses that the company further selected enterprises with similar size,profitability and growth rate in the same region.Furthermore,this paper finds that the region market environment has a significant positive effect on the M&A decision.In the region with the higher marketization degree and in the eastern part,the Peer Effect is more obvious.Compared to existing literature,this paper provides a new theoretical perspective on M&A decision,and it also provides further empirical evidence of peer effects in corporate business decisions.In a word,this paper will enrich the M&A research and peer effects research,and give some enlightenment to practitioners.