The Study Of The Relationship Between Executive Overconfidence And M&A Performance

In recent years,the number and the amount of M&A transactions increased rapidly.But some scholars have shown that most companies cannot improve the performance of enterprises through M&A.There is a paradox between theory and practice.Scholars have been studying how to explain the fact that M&A performance is not ideal but the M&A events occur frequently.With the development of behavioral finance,research shows that managerial overconfidence has a negative effect on the performance of M&A to a certain extent.The corporate governance mechanism is improving day by day,and the corporate governance mechanism shows good supervision and incentive function,which can improve the performance of M&A.However,previous studies have rarely talked about the impact of corporate governance mechanisms and executive overconfidence on the performance of M&A.Consequently,this paper starts from the internal and external corporate governance,and considers whether corporate governance can adjust the impact of overconfidence on M&Aperformance,has a certain theoretical and practical significance.This paper reviews the domestic and foreign related research literature and basic theory which researched on corporate governance,executive overconfidence and M&A performance,and analyzes the relationship and mechanism between the three.On the basis of theoretical analysis,this paper takesM&A behaviors happenedin Shanghai and Shenzhen two cities of A shares of listed companies in 2014-2015 as research samples,using the factor analysis,variable analysis,multiple regression analysisto test the relationship between executive overconfidence and M&A performance.At the same time,this paper introduced the executive stock ownership,independent directors,ownership concentration and the two positions settingas the company internal governance factors while treated the market competition,creditor governance,external audit governance and government governance as the external factors,studying their impact on the overconfidence and the performance of M&A respectively.The main conclusions are as follows:(1)executive overconfidence and M&A performance is negatively correlated,the higher the degree of managerial overconfidence,the worse the performance will be after M&A;(2)The internal governance mechanism can significantly inhibit the negative impact of overconfidence on the performance of M&A,the proportion of executive stock ownership,the proportion of independent directors,the concentration of ownership and the separation of the two can weakenthe negative impact of overconfidence on the performance of M&A,which shows that the company's internal governance mechanism has played a good role in supervision and stimulation;(3)The external corporate governance mechanism reduces the negative impact of overconfidence on the performance of M&A,the creditors governance and the external audit governance reduce the negative impact of executive overconfidence on the performance of M&A,market competition and government governance has a moderating effect on the relationship between the two,but not significant.Review the full text,the innovation of this paper is mainly reflected in two aspects:(1)from the two dimensions of internal and external,this paper studies the influence of corporate governance on the relationship between executive overconfidence and M&Aperformance.The perspective is more innovative;(2)multidimensional measurement of M&A performance,executive overconfidence and corporate governance three variables,which make the conclusion more reliable.