Institutional Investor Holdings & Serial M&As

As the activity of M&A transactions in China has gradually increased,M&A activity has shown a new trend of trasition from single to continuous and issues related to continuous M&A have also received increasing attention.Institutional investors' shareholding as part of the corporate equity structure has been introduced into the research of corporate mergers and acquisitions by many scholars based on corporate governance.Institutional investors are increasingly becoming important players in the capital markets.In order to study whether institutional investors play a role in the continuous mergers and acquisitions of listed companies,this paper research the relationship between institutional investors and the long&short-term performance of continuous mergers and acquisitions activity,and also trying to figure out whether institutional investors reduce the agency costs of enterprises by affecting long&short-term M&A performance.Based on information asymmetry theory,manager self-sufficiency hypothesis,stakeholder theory and principal-agent theory,this paper argue that institutional investors have more diverse information channels,more professional management teams,and higher institutional investors share-holding rate.Investors who hold large scale of holdings tend to have stronger willingness and ability to participate in corporate governance,and to play a supervisory role on company management,which,to a certain extent,prevent management from potential damage caused by managers' own self-confidence and personal interests pursuing activities whichleading to Ineffective M&A decisions.However,the effect of institutional investors' shareholdings on improving corporate governance is different on the long-term and short-term,and the changing of short-term yield of M&A companies is greatly affected by market environment and economic policies.In theory,this paper proposes the assumption that institutional investors can improve the performance of acquiers' continuous mergers and acquisitions activities in the long run by reducing the agency cost of company,and can not have significant effects in the short term.By using the event research methoda and financial analysis method,this paper extracts the M&A transaction data of the acquirer from the WIND financial database introduces the agency cost as the intermediary variable and analyzes the relationship between the institutional investor's shareholding and the long&short-term performance of the continuous M&A activity.The empirical result shows that institutional holding rates can not significantly improve the performance of continuous M&A activities in the short term,but can play a supervisory role in the long run through improving the principal-agent problem of enterprises and affecting the performance of continuous mergers and acquisitions.The academic contribution of this paper comes from the reason that this paper introduces the agency cost of enterprise as mediator variable to further explorers the influence factors of continuous M&A activities and fills up the research gab between continuous M&A activities and institutional holding rates based on the previous research of China's continuous M&A activity performance affecting factors for the first time.In the last chapter,this paper proposes corresponding policy recommendations to optimize China's corporate governance structure and perfect capital market system based on its own empirical result.