Research On The Impact Of Executive Overconfidence On M&A Performance

M & A is an important way for enterprise resource allocation and rapid growth.In recent years,the volume of M & A transactions has grown rapidly,but studies have shown that some companies have failed to achieve profit growth through M & A.There is a "M & A paradox" between theory and practice.So,how to explain the fact that M &A performance is not satisfactory,and the frequent occurrence of such unsatisfactory M& A performance? With the development of behavioral finance research,the research finds that executives' overconfidence will negatively affect corporate M & A performance to some extent.Corporate governance can improve corporate mergers and acquisitions performance by monitoring corporate mergers and acquisitions and post-merger operations.However,in the past,it has been relatively small to study the impact of corporate governance and executive overconfidence on M & A performance.Therefore,this article starts with the "M & A paradox" at the source of the problem.One is to verify whether the psychological characteristics of executives' overconfidence will have a negative impact on M & A performance and trigger the "M & A paradox".Executives' overconfidence has a negative impact on M & A performance and resolves the “M & A Paradox”.This article reviews and analyzes related research literature on M & A performance,executive overconfidence,corporate governance,and the relationship between the three.Based on the analysis of economies of scale,overconfidence theory,principal-agent theory,corporate governance theory,and stakeholder theory,763 listed companies in China's Shanghai and Shenzhen A-share mergers and acquisitions from 2014 to 2016 were selected.For the research sample,the data covers the year of 2013-2018.An empirical study was conducted using a combination of principal component analysis and multiple regression analysis to test the impact of executive overconfidence on M & A performance.This article selects 10 indicators that reflect the company's internal governance,external governance,and Chinese characteristics governance levels as corporate governance factors.The principal component analysis of these factors establishes the corporate governance level.The level of corporate governance is measured by the level of corporate governance,and its moderating effect on therelationship between executives 'overconfidence and M & A performance is examined,and their impact on the relationship between executives' overconfidence and M & A performance is examined.The research conclusions of this paper are:(1)the excessive self-confidence of executives has a negative impact on the performance of mergers and acquisitions;(2)the level of corporate governance can significantly inhibit the negative impact of executives' overconfidence on the performance of mergers and acquisitions.Finally,based on the results of regression analysis and research conclusions,this paper proposes the countermeasures of this paper,in order to give full play to the role of incentives and supervision of corporate governance,to achieve the purpose of restraining executives' overconfidence behavior and regulating the company's merger and acquisition decisions,thereby reducing the overconfidence The negative impact of the performance of mergers and acquisitions enables the actual decision-making of corporate mergers and acquisitions to achieve the expected benefits of corporate development strategies and improve the core competitiveness of enterprises.