Financial Advisors’ Reputation And Acquisition Performance Commitment

In the past decade,China’s M & A market has been developing vigorously with unprecedented opportunities and challenges.On the one hand,under the encouragement of the merger and reorganization policy,enterprises have achieved the goals of optimizing resource allocation,expanding the scale of enterprises and realizing strategic transformation through merger and reorganization.On the other hand,with the rapid development of M & A market,it also brings many new problems,such as the high valuation premium rate,the frequent thunder of the target company’s performance after M & A,which results in the poor actual effect of M & A.According to the regulations of the CSRC,the financial advisory institutions employed by enterprises in M & A have important responsibilities for the formulation and control of M & A plans.Based on the current situation of the M & A market,this paper attempts to explore the relationship between the financial advisors’ reputation and the performance commitment of M & A and the factors that affect the reputation function of financial advisors from the perspective of independent third-party intermediaries,reveals the mechanism of financial advisors’ reputation restraining the false high performance commitment of M & A,with a view to providing references for solve the problem of false high performance commitment from the source and improve the achievement effect of performance commitment.Based on the review of the literature research on the financial advisors’ reputation and the performance commitment of M & A,this paper combines the reputation theory,the information asymmetry theory and the signaling theory to start the research.Firstly,it constructs the theoretical analysis framework of the impact of the financial advisors’ reputation on the radical degree of performance commitment and the impact of the financial advisors’ reputation on the achievement rate of performance commitment when the commitment is completed.Secondly,from the two stages of M & A(property right nature and external governance)and commitment period(compensation method and two-way commitment),the paper analyzes the factors that influence the reputation function of financial advisors.Finally,take the M & A and restructuring events of Listed Companies in 2009-2018 that employ financial consultants and sign performance commitment compensation agreements as samples,this paper empirically test the relationship between the financial advisors’ reputation and the radical degree and achievement rate of performance commitment,as well as the factors that affect the reputation function of financial advisors.The results show that: in M & A,the financial advisors’ reputation has a significant negative correlation with the radical degree of performance commitment,that is,reputation is conducive to inhibit the radical degree of performance commitment;and the grouping regression results of the nature of property rights and external governance show that the effect of financial advisors’ reputation on performance commitment is more significant when M & A of non-state-owned enterprises and institutional investors is high.When the commitment is completed,the financial advisors’ reputation has a significant positive correlation with the achievement rate of performance commitment,that is,reputation is conducive to improving the achievement effect of M & A performance commitment;and the grouping regression results of compensation methods and two-way commitment show that the effect of financial advisors’ reputation on achievement rate of performance commitment is more significant in cash compensation and two-way commitment.The above conclusions are still true after replacing variables and applying Heckman’s two-stage method to control sample self-selection.According to the research conclusion,this paper puts forward relevant suggestions from four aspects: strengthening the strategic planning function of financial advisors,accelerating the separation of government and enterprise,improving the external governance mechanism of listed companies,and designing and improving the performance commitment terms.The paper has 1 picture,20 tables,and 134 references.