Manager Over Confidence Free Cash Flow Mergers And Acquisitions Performance

As an effective path for rapid expansion of company scale,MERGERS and acquisitions have been increasingly favored by listed companies in recent years.However,according to information disclosure data,most mergers and acquisitions have problems such as failure,low efficiency and high premium,and the transaction volume of mergers and acquisitions has been increasing in recent years.The failure of MERGERS and acquisitions is high,but the volume of mergers and acquisitions increases,which is difficult to judge rationality from the perspective of rational people.In order to study the above problems,this paper combined with a large number of scholars,from the perspective of managers’ irrationality,studies how managers’ overconfidence will affect the results of M&A performance.The research believes that managers have overconfidence in m&a decision-making and overestimate m&a decision-making,which leads to the decline of M&A performance.It is hoped that this study can provide reference and supplement to previous studies and open up new ideas for m&a research of listed companies.This paper takes a-share listed companies in Shanghai and Shenzhen stock markets from 2011 to 2020 as the research sample,and empirtically studies the relationship between managers’overconfidence as the explanatory variable and M&A performance as the explained variable.The preliminary correlation test,the regression analysis results of managers’ overconfidence and M&A performance without and with control variables show negative correlation and significant influence.According to the moderating variable analysis,the higher the free cash flow,the more the negative impact of managers’ overconfidence on m&a performance will be inhibited,that is,it has a negative moderating effect.The better the growth of enterprises,the more the negative impact of managers’overconfidence on m&a performance will be deepened,that is,it has a positive moderating effect.According to the heterogeneity analysis,state-owned enterprises and small-scale enterprises are negatively correlated with each other by the nature and size of enterprises.The above research conclusions show that managers’ overconfidence is negatively correlated with M&A performance and has a significant impact.In addition,this paper adopts the substitution variable method to conduct robustness test,and the regression results all support the hypothesis of this paper,that is,managers’ overconfidence is significantly negatively correlated with M&A performance.When PSM method is adopted to deal with endogeneity,managers’ overconfidence has a significant negative correlation with M&A performance,which is consistent with the benchmark regression conclusion,indicating that the original conclusion is still valid after overcoming endogeneity.According to the research results of this paper,it is suggested that the company should establish effective reward and punishment mechanism for managers and the construction of internal control system in the actual operation,so as to restrain managers to be more cautious and rational when making m&a decisions.In addition,it is suggested that state-owned holding companies should minimize government intervention;When making investment decisions,small enterprises should not blindly expand their scale..