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The Empirical Research about the Effect of Managerial Overconfidence on the M&a Decision in the Listed Company of Our Country

Author: WangYaMei
Tutor: ZhangShuangCai
School: Hebei University
Course: Accounting
Keywords: Managerial Overconfidence Acquisition motivation M \u0026 A decision
CLC: F224
Type: Master's thesis
Year: 2011
Downloads: 121
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Abstract

With the continuous development of the capital market and the constant improvement of the rule of law, mergers and acquisitions have become the company's capital operation and optimizing resource allocation. Company mergers and acquisitions for a business to have great significance, not only to avoid falling into bankruptcy, the plight of the ailing company, and the company can make acquisitions in the involvement of new areas do not have to start from scratch. However, the the Loughran and Agrawal et al's study found that M \u0026 A activity is not always able to bring wealth to the shareholders, and sometimes even cause the loss of shareholder wealth. Some scholars, this phenomenon investigation, pointed out that some corporate M \u0026 A activity may occur from confident CEO who, they overestimate their knowledge, ability, and overestimate the accuracy of the information available to them, or overestimated they can profits for enterprises, not because potentially available profits. They believe that their ability is stronger than the M \u0026 A business manager's ability to believe the enterprise to better performance management, therefore U.Malmendier, G.Tate. Overconfident managers discovered through empirical research implementation of the plan for the acquisition will be more frequent. Thus, in the period of economic restructuring in China, research managers overconfidence Chinese Listed Company M \u0026 A decision has practical significance. The thesis of this paper is organized as follows: Chapter Preface, including research background, significance, research framework and innovation; Chapter II is underlying theory and literature review. Overconfidence theory first introduced, including overconfidence reasons, performance and impact factors mainly is below for further studies lay the foundation; then is on the M \u0026 A action due to the theoretical overview, including conventional economics, company mergers and acquisitions automatically due and behavior of financial company mergers and acquisitions in the learning motivation, learning that managers overconfidence is one of the motives of the implementation of M \u0026 A activity; Finally, scholars managers overconfidence company M \u0026 A decision analysis that managers excessive self-confidence is an important reason for the implementation of M \u0026 A activity, which means that managers are more overconfidence, the more willing to implement inefficient wasteful acquisitions. Chapter introduce managers overconfidence metrics do empirical research on the overconfidence of managers and M \u0026 A investment, confirmed a positive correlation between the managers of overconfidence and M \u0026 A frequency. In the fourth chapter, we analyze the managers overconfidence over mergers and acquisitions investment, China's state-owned enterprises, China shares in the absence of free cash flow too ample. In this paper, based on overconfidence impact of M \u0026 A activity offset managers several recommendations, including raising the stake to state-owned enterprises to introduce strategic investors of the company's managers, the company's free cash flow is controlled to a reasonable level and so on. The fifth and final chapter is a summary and outlook of this article.

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