| With the development of economies of scale and the increasingly sophisticated capital market in recent years,mergers and acquisitions(M&A)have gradually become an effective means for companies to expand their scale and enhance their market competitiveness.The number and scale of M&A transactions have been on the rise in recent years.It has been found that there is a common problem of high premium rates in M&A transactions.Therefore,studying the M&A premium has its practical significance.The reasons for this phenomenon come partly from internal corporate drivers,where overconfident managers may pay higher M&A premiums due to their cognitive biases towards the market and risks.On the other hand,external market behavior also drives this phenomenon.Performance commitment clauses signed during the M&A process promote the M&A premium.This valuation clause increases the value by releasing signals of good performance for the acquiring party.Therefore,this article studies the impact of managers’ overconfidence on M&A premiums from the perspective of performance commitment.This article takes M&A events from 2010 to 2020 as the research object,and based on existing literature,it reviews the research status of overconfident managers,performance commitments,and M&A premiums.It proposes hypotheses based on high-order theory,bounded rationality theory,and agency theory to study the correlation between overconfident managers and M&A premiums.Furthermore,utilizing theories of information asymmetry,signal transmission,and synergy,the paper formulates hypotheses to examine how performance commitments moderate the relationship between overconfident managers and M&A premiums.Finally,from the perspectives of the property nature of the acquiring party,the type of M&A,and the heterogeneity of external audit characteristics,it discusses the inter-group differences of the impact of overconfident managers on M&A premiums.Through empirical analysis,this article draws the following conclusions:(1)the higher the degree of overconfidence of managers,the higher the M&A premium level.(2)The empirical analysis of the moderating effect shows that signing performance commitments during M&A can strengthen the positive effect of overconfident managers on M&A premiums.The growth rate of performance commitments in the valuation clause can also strengthen the positive effect of overconfident managers on M&A premiums.The relationship between the growth rate of performance commitments and the correlation between overconfident managers and M&A premiums does not have a linear moderating effect,but may have other types of moderating relationships.This is because the high growth rate of performance commitment clauses is considered equivalent to the "failure" of performance commitments,which has not played a good role in information transmission but can trigger the scrutiny of overconfident managers.(3)After conducting an extension analysis,it was found that there were inter-group differences in the correlation between overconfident managers and M&A premiums under different M&A characteristics.In private enterprises,non-horizontal M&A,and hiring non-international "Big Four" accounting firms,the correlation between overconfident managers and M&A premiums is positive,and signing performance commitments can enhance the positive correlation between overconfident managers and M&A premiums.However,in state-owned enterprises,horizontal M&A,and hiring international "Big Four" accounting firms,the above correlation is not significant.Based on the above research conclusions,this article proposes three suggestions:Firstly,by optimizing the characteristics of the management team,the irrational behavior of managers can be reduced.Secondly,the corporate governance mechanism should be improved.From an external governance perspective,accounting firms should be selected cautiously to ensure their effectiveness in M&A,while from an internal governance perspective,the proportion of independent directors should be increased,and the measures for their election should be improved.Finally,we should treat the terms of performance commitment carefully,objectively examine and verify the rationality of the growth rate of performance commitment,and suggest that the regulatory authorities ensure the implementation of performance compensation commitments,protect the legitimate rights and interests of both parties to the merger and acquisition,and reduce the risk of the merger and acquisition. |
