Research On The Relationship Between IPO Over-financing,Incentive Systems And Corporate M&A

As an important part of China's capital market,GEM undertakes three major tasks: supporting high-tech SMEs,improving the exit mechanism of venture capital,and deepening the reform of China's multi-level capital market system.However,this emerging trading sector was criticized for its high IPO price and huge overfunded fund shortly after its establishment.In order to prevent the abuse and misappropriation of funds,the regulatory authorities have formulated a series of regulations to guide listed companies to use overfunded funds correctly and reasonably,but not to restrict their use in mergers and acquisitions.Whether from the point of view of improving the efficiency of capital use,reducing agency costs,or from the point of view of strengthening the company's competitiveness and expanding the company's business scale,M&A is a fast and legal way to use overfunded funds.After the IPO,the M&A and reorganization activities of GEM companies are indeed becoming more and more active.In order to explore the impact of IPO over-financing on M&A activities,this paper,relying on the theory of free cash flow,principal-agent and so on,takes the GEM companies which carried out M&A activities from 2010 to 2016 as the research sample,systematically examines the impact of IPO over-financing on the decision-making of M&A in the early stage of business transactions and the performance of M&A in the late stage of business transactions.IPO over-financing affects the mechanism of mergers and acquisitions.On this basis,under the guidance of corporate governance theory and incomplete contract theory,this paper further constructs the relationship model between IPO over-financing,M&A performance and incentive mechanism,and empirically studies whether the incentive mechanism of the main merger company will affect the relationship between IPO over-financing and M&A performance.In order to ensure the reliability of conclusions of the study,this paper also makes a robust test.The empirical results of this paper show that:(1)IPO over-financing enterprises are more likely to implement M&A,and the frequency and degree of M&A are significantly greater.(2)M&A will reduce the M&A performance of the main company.(3)Salary incentive can positively regulate the relationship between the overfund and M&A performance,that is,the higher the level of executive compensation incentive,the less likely it is to abuse the overfund for M&A.(4)the adjustment effect of stock bonus on the relationship between over-financing funds and merger effect has not passed the significance test.