Research On The Impact Of Non-executive Directors On Corporate Merger And Acquisition

For enterprises,M&A is an important strategic decision,which can bring the important opportunities of development,and ultimately enhance the company's value.But,due to some reasons,there are many uncertainties about M&A decisions,so that not all mergers and acquisitions can achieve the expected success.Nowadays,the phenomenon of high premium and even super premium in the process of M&A transactions has become the "new normal" of mergers and acquisitions of listed companies.Even the M&A activities cannot be carried out effectively,which leads to the failure of M&A decisions and affects the value of enterprises after M&A.As the core of corporate governance,the board of directors needs to balance the management's self-interest in order to ensure the smooth progress of M&A transactions.More importantly,it must provide strong information support for the company's M&A decisions.Therefore,the M&A decision-making problem of the enterprise reflects the governance efficiency of the board of directors to a certain extent.Whether the governance of the board of directors is effective will directly affect the level of merger and acquisition premiums in the M&A activities,and affect the performance after the M&A.Generally speaking,the composition of the board of directors can be summarized into two categories:executive directors and non-executive directors.However,the special shareholding structure of "one big share" of listed companies in China makes some non-executive directors other than independent directors in the board of directors,referred to herein as non-executive directors.With the gradual deepening research on the structure of the board of directors,a large number of scholars have found that the governance role of the board of directors is largely determined by external directors.Previous studies have always considered independent directors as important representatives of outside directors,and the proportion of independent directors as the most important indicator of the effectiveness of board governance.However,in recent years some scholars have pointed out that in the capital market of China,the effectiveness of independent directors is limited,their independence is doubtful,and the information obtained is asymmetric,and they do not really play their due supervision and decision-making role.In contrast,most of the non-executive directors are directors appointed by the controlling shareholders,actual controllers or other shareholders of the listed company but not in the management of the listed company,or the non-executive directors themselves are shareholders.They are more independent of managers and more representative of the interests of shareholders.Their governance role is also increasingly prominent in listed companies.Then,as an important part of the board of directors,can non-executive directors effectively play the role of decision-making and supervision in the process of mergers and acquisitions?This paper explores the following questions from the perspective of theoretical analysis and empirical testing:Will non-executive directors have an impact on the premiums and performance of M&A,and if so,how impact?In addition,in the enterprises of different equity nature,will the governance role played by non-executive directors be different?Can the equity balance can produce an effective regulation?In the theoretical analysis part,this paper reviews the literatures in related fields at home and abroad,and analyzes the relationship between non-executive directors and company mergers and acquisitions based on Principal-agent Theory,Information Asymmetry Theory and Resource Dependence Theory,and puts forward the influence mechanism of the nature of equity and the balance of ownership on the relationship based on the realistic background of the enterprise.In the empirical test part,this paper selects the M&A transaction events of Shanghai-Shenzhen A-share listed companies in 2006-2014 as the research sample,builds a regression model between variables based on previous studies,and uses statistical analysis software to make some analysis,verified the impact of non-executive directors on the company's-M&A premium,M&A performance,and the adjustment effect of equity nature and equity balance.Based on theoretical analysis and empirical test,the following research conclusions are drawn:(1)The higher the proportion of non-executive directors,the lower the premium paid by the company during mergers and acquisitions.Compared with state-owned enterprises,the negative impact of non-state-owned enterprises' non-executive directors on the M&A premium is more significant,but the impact of the non-executive directors of high-equity balance on the M&A premium will be weakened.(2)The higher the proportion of non-executive directors,the better the performance of the company after mergers and acquisitions,and the positive impact of non-state-owned non-executive directors on M&A performance will be more obvious.The high equity balance is plays a depressing role of the relationship between non-executive directors and M&A performance.According to the research conclusions,this paper proposes the following policy recommendations:China's listed companies should continuously optimize the structure of the board of directors,adjust the proportion of board of directors,ensure that all types of directors can play a functional role in their respective positions,enhance the efficiency of the board of directors;strengthen the construction of non-executive directors not only the increase in the number of personnel,but also the source channels of non-executive directors,enriching the background of the board of directors,paying attention to the training and promotion of the non-executive directors,and attaching importance to the resource effects attached to non-executive directors;To create a good atmosphere for non-executive directors to play a role,reduce government intervention and ensure that the listed company's equity balance is in a reasonable state,so that non-executive directors can speak bravely in the face of problems,have sufficient enthusiasm to participate in the company's merger and acquisition decisions,and create wealth for shareholders.