The Impact,Mechanism And Economic Consequences Of Social Trust On Excess Goodwill

As Chinese economy is currently undergoing a transition period from high-speed growth to high-quality growth,listed companies can play a role in revitalizing stock,improving quality and efficiency,and transforming development through mergers and acquisitions.Marked by the introduction of the Measures for the Administration of Major Assets Reorganization of Listed Companies in 2014,M&A and reorganization in the capital market entered a new stage of development,with the number and scale of M&A growing rapidly and the goodwill assets of listed companies expanding rapidly.However,not all sources of goodwill are reasonable,and the existence of problems such as agency conflicts and management overconfidence can easily generate excess goodwill.For listed companies,excess goodwill is a "time bomb" for their future sustainable business development,and for the capital market,excess goodwill has a negative impact on their healthy and stable development.How to effectively curb excess goodwill has aroused extensive discussions from all walks of life,among which the role of the informal system for corporate governance cannot be ignored.In the current context of the state actively cultivating and practicing socialist core values and solidly promoting the construction of credit concept and credit system,social trust,as a typical representative of informal system,is of great significance in regulating group behavior and promoting cooperation.Based on this,this paper investigates the influence of social trust on excess goodwill through empirical methods and further systematically explores its specific mechanisms and economic consequences,which not only expands the relevant research on social trust,but also has important practical significance for effectively controlling the scale of excess goodwill and optimizing the corresponding regulatory measures.In this paper,firstly,the relationship between social trust and excess goodwill is theoretically analyzed from the perspective of principal-agent theory,combined with information asymmetry theory and social capital theory,and the reputational effects of social trust and the social norms formed.Secondly,the A-share listed companies from2007 to 2020 are selected as the research samples.Descriptive statistics,correlation analysis and regression result analysis are conducted to study the influence of social trust on excess goodwill and its mechanism of action.Then,the variables related to internal control,legal system environment,whether it is a high-tech enterprise and different stages of goodwill scale development are introduced to study the heterogeneous influence of social trust on excess goodwill in this context.Subsequently,variables related to corporate innovation and corporate growth are introduced to explore the economic consequences of social trust and excess goodwill in these two aspects.Finally,based on the theoretical analysis and the empirical results,the findings of the study are summarized and relevant suggestions are made.The findings of this paper find that(1)social trust can inhibit the size of excess goodwill;(2)social trust mitigates agency conflicts by weakening executives’ self-interested behavior,which in turn inhibits excess goodwill;(3)the inhibitory effect of social trust on excess goodwill is stronger when the quality of internal control is low or the regional legal system is not perfect;the inhibitory effect of social trust on excess goodwill is more significant in high-tech enterprises;the inhibitory effect of social trust on excess goodwill is more significant in the period of rapid growth of scale(2014-2020);(4)excess goodwill inhibits corporate innovation and long-term corporate development,while social trust can weaken the negative effect of excess goodwill on corporate innovation and long-term corporate development.The contribution of this paper is mainly reflected in the following three aspects:(1)enriches the relevant research on how to effectively suppress excess goodwill,this paper selects social trust,a typical informal institution,and studies its influence on excess goodwill,providing a new analytical perspective on how to effectively suppress excess goodwill;(2)it enriches the research related to the economic consequences of social trust,and this paper provides a useful supplement to the research on the impact of social trust on excess goodwill,which has led to frequent stock market "thunderstorms" in recent years.(3)the findings of this paper have important practical significance,which can help relevant departments to strengthen the promotion of integrity and morality,enlighten enterprises to make prudent M&A decisions,and guide investors to view corporate M&A behavior rationally.