RESEARCH ON THE RELATIONSHIP BETWEEN MANAGEMENT OVERCONFIDENCE, CORPORATE GOVERNANCE, AND M & A PREMIUM - AN EMPIRICAL TEST FROM CHINA’S A-SHARE LISTED COMPANIES

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Zhanyong Lu

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 This article uses the listed companies that have undergone mergers and acquisitions in China’s A-shares from 2014 to 2018 as a sample to empirically test the impact of management confidence on the premium and corporate governance on the M&A premium. The research shows: (1) the higher the overconfidence of management, the higher the premium generated during the merger; and (2) the higher the level of corporate governance, the lower the premium generated during the merger. Based on the above conclusions on premiums, in order to better control the high premiums in corporate mergers and acquisitions, companies should avoid blind mergers and acquisitions, improve corporate governance, prevent mergers, and acquisitions premiums, establish a market value management system, and strengthen the overall supervision and management of regulatory agencies. In addition, they should pay attention to the comprehensive integration after the completion of mergers and acquisitions, and strengthen the risk awareness education of small and medium investors.

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