The Slack Resources And Diversified M&A

The wave of mergers and acquisitions around the world is still going on.Although China's M&A activity started late compared to Western capital markets,the scale of China's M&A transactions has grown rapidly,and diversified M&A transactions have also increased rapidly with the development of M&A transactions in China..As an important way for enterprises to transform and develop and acquire synergies,diversified M&A is more and more valued by enterprises.The diversified M&A cases in China are also increasing year by year.However,with the increase of diversified M&A events,many companies have not only obtained Benefit,but it leads to the loss of the value of the enterprise itself,which indicates that the synergy income generated by the company's choice of diversified mergers and acquisitions is difficult to make up for the losses it brings to the enterprise.Therefore,why the enterprise chooses diversified mergers and acquisitions has become a research hot-spot for scholars at home and abroad.The agency theory believes that the motivation of diversified mergers and acquisitions is caused by the agency problem between the principal and the agent.The managers of the enterprise can achieve the purpose of increasing personal income and improving the level of occupational security through diversified mergers and acquisitions.The existence of redundant resources is a common phenomenon in Chinese enterprises.The research on the sources of redundant resources mainly has two perspectives.First,based on the perspective of bounded rationality,due to the ambiguity between the causal relationship and the path dependence,the enterprise The operation will be subject to cognitive limitations.Therefore,in the production and management process of the enterprise,not all links are in an efficient state.Secondly,based on the perspective of power behavior,redundancy is considered to be internal.As a result of power struggles,managers will choose to overestimate costs and underestimate output to create redundancy,which can lead to redundant resources.The existence of redundant resources can enable enterprises to better cope with the impact of external environmental changes on enterprises,but at the same time,the free cash flow hypothesis points out that redundant resources are the source of enterprise agency problems,due to conflicts in the interests of managers and shareholders.This makes managers more willing to use redundant resources for their own personal interests.Therefore,the use of redundant resources as a motivation for diversified mergers and acquisitions is of great significance for rationally disposing of redundant resources of enterprises and easing the principal-agent problem in diversified mergers and acquisitions.Based on the theoretical analysis of free cash flow hypothesis and principal-agent theory,this paper selects listed companies with M&A transactions from 2012 to 2014 as research samples,and adopts diversified M&A choices as explanatory variables and redundant resources as explanatory variables.Constructing multiple linear regression models with equity concentration and equity checks and balances,and descriptive statistical analysis,correlation analysis and multiple regression analysis to examine the relationship between redundant resources and diversified mergers and acquisitions,as well as different equity The change in the relationship between the two in the case of structure.The research finds that:(1)Redundant resources are positively related to diversified mergers and acquisitions,that is,the more redundant resources,the more enterprises tend to diversify mergers and acquisitions,the redundant resources increase,and the problem of corporate agency increases.Diversified mergers and acquisitions initiated by private interests.(2)The concentration of ownership has a restraining effect on the positive correlation between redundant resources and diversified mergers and acquisitions.Specifically,the increase in the company's equity concentration can increase the supervision of management and reduce the management problems in the company's diversified mergers and acquisitions,thus inhibiting the positive impact of redundant resources on diversified M&A options.(3)The balance of equity has an enhanced effect on the positive correlation between redundant resources and diversified mergers and acquisitions.That is,the high degree of equity of the company's equity will lead to competition for control among major shareholders,which will weaken the supervision of the major shareholders on the management,resulting in an increase in agency problems,thereby enhancing the positive impact of redundant resources on diversified M&A options.Based on the results of empirical research,this paper suggests:(1)Reasonably dispose of redundant resources of the company,avoid waste and over-investment of redundant resources of the company,and it is not advisable to remove redundancy in a one-size-fits-all manner.The company should handle redundant resources reasonably and carefully,and improve the efficiency of use of redundant resources..(2)Maintaining moderate equity concentration.In the case of imperfect legal mechanisms in the capital market and insufficient investor protection,only the annual salary system and stock options and other incentives for managers are still limited,and the moderate concentration of equity can be improved.Internal governance efficiency to compensate for the shortcomings of external governance mechanisms.(3)Adjust the shareholding ratio among shareholders and control the balance of equity.Listed companies should establish a reasonable shareholding structure model,coordinate the state of equity concentration and equity checks and balances,and ensure that the company can better manage its development.(4)Carefully choose diversified mergers and acquisitions.As China's capital market is still not perfect,the risks and costs brought by diversified mergers and acquisitions are far higher than the benefits it can bring.Therefore,the company should carefully choose the target of diversified mergers and acquisitions.Enterprises,try to choose industries that are related to the company's main business.For non-relevant mergers and acquisitions to enter unfamiliar areas,we should make a decision after a thorough investigation to avoid blindly entering the industry unrelated to the main business in pursuit of short-term market heat.in.(5)It is necessary to improve the responsibilities of the board of directors,the board of supervisors and other departments in corporate governance,and establish a more effective modern corporate governance mechanism.