Executive Compensation,Tunneling Of Major Shareholders And M&A Performance

In the era of low-carbon economy,the service industry contributes more and more to China's economic development.As an important component of the service industry,the cultural industry and tourism industry have attracted extensive attention from the government and all sectors of society in recent years.In March 2018,the Ministry of Culture and Tourism was listed,which profoundly reflected the important strategic position and strong development momentum of the cultural and tourism industry.As one of the effective ways for enterprises to realize rapid expansion and resource allocation,merger and acquisition(M&A)can help to enhance the competitiveness of the cultural and tourism industry and promote its better development.In recent years,M&A activities in the cultural and tourism industry have become increasingly active,and many influential M&A events have emerged.Under the background of the M&A boom,more and more scholars and practitioners have paid attention to the qualities and effects of M&A events.All interest groups generally pay attention to whether the cultural and tourism industry can achieve the improvement of comprehensive strength after M&A activities.With the separation of ownership and management of modern enterprises,the management decisions of a company are largely influenced by two kinds of principal-agent problems:one is between shareholders and management,the other is between major shareholders and minority shareholders.As an important business activity of enterprise,M&A will naturally be disturbed by the two kinds of principal-agent relationships.Due to the difference between the target interests of the management and shareholders,the management is likely to use information asymmetry to make inefficient M&A decisions and seek personal interests through M&A activities.In order to alleviate the first type of principal-agent contradiction,various ministries and commissions of the state have issued a series of executive compensation incentive policies.These policies can guide listed companies to formulate effective executive compensation systems,so as to achieve the unification of the interests of executives and shareholders as far as possible.In addition,some scholars have confirmed that there is a phenomenon of "one share dominates" in many China's listed companies.Major shareholders are likely to damage the interests of small and medium shareholders as well as the enterprise value in the process of pursuing self-interest in controlling rights.M&A is a main way for major shareholders to implement the tunneling behaviors.At present,most researches on the incentive effects of executive compensation focus on enterprise value,and there are various research perspectives and different conclusions on the research of executive compensation in M&A activities.For the tunneling of major shareholders in the process of M&A,scholars mostly discuss whether there is tunneling of major shareholders in the process of M&A and the impact of M&A on tunneling behavior.Researches on the impact of tunneling degree of large shareholders on M&A performance are scarce.In addition,most of the empirical papers on M&A activities at home and abroad take the whole industry as the research object,and the conclusions cannot be well applied to various sub-industries.Literature on M&A activities in cultural and tourism industries is mostly theoretical and less empirical.Therefore,focusing on the relationship between executive compensation,tunneling of major shareholders and M&A performance of listed companies incultural and tourism industry,this paper has certain theoretical value and practical significance.Based on the background of the M&A boom in the cultural and tourism industry,this paper adopts the research method of combining normative and empirical methods,takes the business performance of enterprises after M&A activities as the research perspective,selects the cultural and tourism industry M&A events from 2009 to 2016 as the research object(considering the variable processing needs,the actual sample period is between 2007 and 2018),adopts the fixed effect model to respectively discuss the relationship between executive compensation and M&A performance as well as the relationship between tunneling of major shareholders and M&A performance.In addition,this paper brings two kinds of principal-agent problems into one research framework to study the impact of their combined effects on the M&A performance of listed companies in the cultural and tourism industry.What's more,the research samples are further divided into state-owned enterprises and non-state-owned enterprises to explore whether the empirical results show significant differences due to different property rights.Through the analysis of the empirical results,this paper draws the research conclusions and puts forward countermeasures and suggestions based on these conclusions.According to the research topic,this paper mainly includes the following six parts:The first part,introduction.As the first part of this paper,it firstly introduces the background and research value,puts forward the research contents and methods,expounds the possible innovation points and shortcomings,and finally presents the framework diagram of this paper's research methods.The second part,literature review.This part summarizes the research results of the incentive effect of executive compensation,executive compensation and M&A,economic consequences of the tunneling of majorshareholders,the tunneling of major shareholders and M&A,M&A activities in cultural and tourism industry,M&A performance at home and abroad in detail,and provides empirical evidence for the following empirical research.In addition,it reviews the existing literature and puts forward the research opinions of this paper.The third part,concept definition,theory foundation and hypothesis propose.Firstly,it defines the main concepts involved in this paper,including executive compensation,tunneling of major shareholders,M&A,as well as the cultural and tourism industry.Secondly,it analyzes the relationship between executive compensation,tunneling of major shareholders and M&A performance of listed companies in the cultural and tourism industry through principal-agent theory,M&A theory,incentive theory and tunnel theory.Finally,three research hypothes of this paper is proposed.The fourth part,empirical research design.This part firstly introduces the sample selection and data sources of this study,then expounds the definition and measurement methods of explained variables,explanatory variables and control variables,and finally constructs an empirical regression model based on the research hypothesis.The fifth part,empirical results and analysis.Firstly,descriptive statistical analysis and correlation analysis are carried out on the variables involved in the empirical research.Then,this paper uses the fixed effect model to empirically test the effect of executive compensation,tunneling of major shareholders and their combined effects on the M&A performance of listed companies in cultural and tourism industry.After that,the robustness tests are carried out on the conclusions of this paper by changing the method of variable measurement,centralization,bootstrap and changing the sample interval.Finally,this paper divides all samples into state-owned enterprises and non-state-owned enterprises to explore whether there are differences in the relationship between executive compensation,tunneling of major shareholders and M&A performance under different property rights.The sixth part,research conclusions and suggestions.Based on the empirical results of the fifth part,this paper drawns some main conclusions and puts forward relevant suggestions.These conclusions and suggestions are about the design of the executive compensation incentive system,the degree of controlling the tunneling of major shareholders,and the improvement of the M&A performance.The research results show that:(1)there is an inverted U-shaped relationship between the executive compensation and the M&A performance of listed companies in the cultural and tourism industry.(2)tunneling of major shareholders has a significant negative impact on the business performance of enterprises after M&A activities;(3)the degree of tunneling by major shareholders can weaken the inverted U-shaped relationship between executive compensation and the M&A performance of listed companies in the cultural and tourism industry;(4)the nature of property rights have an impact on the relationship between executive compensation,tunneling of major shareholders and M&A performance.According to the research conclusions,this paper puts forward the following suggestions:(1)design an effective executive compensation incentive mechanism,improve the evaluation and assessment mechanism of M&A performance;(2)strengthen the supervision and restraint of major shareholders,establish and improve the rationality review mechanism of M&A decisions;(3)supervise the M&A process of listed companies in the cultural and tourism industry discriminatively to promote the optimization and upgrading of these industrys.