Research On The Impact Of Independent Director Network On M&A Decisions And Acquisitions Premium

Merger and acquisition,as an important strategic decision-making of enterprises,is of great significance to the long-term development of companies.Especially,large listed companies are likely to participate in it based on their own development needs.Especially at present,China is in an important period of economic development and transformation,and the merger and acquisition market in China is particularly active.According to financial data product CVSourse data statistics,the amount of M&A transactions in 2016 was 1.8 trillion yuan,which increased by 374.11% from 2012 to 2016 alone.Although there was a correction in 2018,it is also a normal rule.The research on M&A has been a hot topic in recent years,and Chinese scholars have begun to study M&A from the perspective of social network.According to social networking theory,individuals in society are connected based on various organizational relationships,thus constructing the whole social network.The whole social network plays an important role in the transmission and sharing of information.Comprehensive,timely and effective information is very important for companies in mergers and acquisitions.Therefore,the social network perspective is used to study its impact on corporate mergers and acquisitions.It has practical significance.Based on the theory of social capital and weak link advantage,this paper studies the impact of independent director network on corporate M&A decision-making and M&A premium.Firstly,this paper combs and reviews the theory of M&A and the theory of network of independent directors,summarizes the theory of motivation of M&A in the west,and expounds the special motivation of M&A in Chinese enterprises,then explains the internal mechanism of M&A between independent directors and companies,and then summarizes the relevant literature on the research of network of directors.On this basis,this paper introduces a new measurement method of directors' network centrality based on the company's perspective,and discusses its influence mechanism on M&A decision-making and M&A premium.Based on previous studies and related theories,and based on the internal mechanism of directors' network and M&A,this paper puts forward research hypothesis.This paper argues that the higher the degree of directors' network centrality is,the higher the degree of directors' network centrality is.The more effective information can be obtained through the network,the lower the information asymmetry between the two sides of M&A,the lower the level of overconfidence of managers,and the more cautious the decision-making of M&A,the lower the premium level of M&A.This paper takes listed companies from 2010 to 2016 as the research object,and selects 12628 valid samples to study the impact of independent directors' network on M&A decision-making,and 2627 valid samples to study the impact of independent directors' network on M&A premium.The results of descriptive statistics show that in recent years,the overall network density of independent directors and the average centrality of independent directors have gradually increased.This shows that with the gradual development of China's economic market,the relationship between companies and companies is closer.By classifying mergers and acquisitions in various industries,we find that the mergers and acquisitions in manufacturing industry account for more than half of the total sample mergers and acquisitions.The number of mergers and acquisitions in computer communication manufacturing industry is the largest,which shows that manufacturing companies in China are more active in the merger and acquisition market.This paper chooses corporate size,asset-liability ratio,development ability,profitability,liquidity and other financial variables as control variables,such as the proportion of independent directors,two concurrent positions,the nature of property rights,the shareholding ratio of the largest shareholder,and so on.In addition,industry dummy variables and annual dummy variables are set to study the impact of corporate network centrality on M&A decisions.Regression results show that the network centrality of independent directors is negatively correlated with M&A decisions.At the same time,this paper puts forward a novel relationship between the network of independent directors and the premium of M&A.By establishing the relationship model between the premium of M&A and the degree of network centrality,taking the premium of M&A as the explanatory variable and the proportion of equity transfer as the control variable,the regression results show that the network of independent directors has a significant negative correlation with the premium of M&A.The results show that the higher the degree of network centrality of a company,the stronger its ability to obtain information through the network,the more effective it is to reduce the information asymmetry and restrain the merger and acquisition behavior caused by managers' overconfidence.On the other hand,the valuation of the main merger company for the target company will be more reasonable,and it will be helpful to know more about the relevant information of the target company in all aspects.Make more reasonable payment price,effectively reduce the level of M&A premium.For the sake of the robustness of the empirical results,this paper constructs an independent director network based on the independent director-company management,and substitutes the average of the network centrality of the independent director for the network centrality of the company.The test results support the relevant conclusions of this paper.Based on the theory of social capital and the theory of weak link advantage,this paper studies the influence of independent director network on the decision-making and premium of merger and acquisition from the perspective that the whole social network can transmit timely and effective information.At the same time,it introduces a new measurement method of network centrality,which enriches the research results of corporate governance,merger and acquisition,and social network.It also has important enlightenment on how to play the role of independent directors in M&A.