Abstract
Using A-share listed companies in Shanghai and Shenzhen from 2008 to 2020 as the original sample, this paper focuses on the impact of M&A goodwill and on the total factor productivity of firms, so as to gain an in-depth understanding of the profound effect of M&A goodwill on firms. The main findings of this paper are: (1) M&A goodwill is negatively related to total factor productivity, i.e., it significantly reduces the total factor productivity of firms. (2) The mechanisms by which M&A goodwill affects firms' total factor productivity are: first, M&A goodwill changes asset allocation decisions, and second, it increases firms' executive compensation and Over-indebtedness. The research in this paper is based on a new perspective of M&A goodwill, which enriches and extends the micro foundations of total factor productivity theory. It also provides a detailed empirical analysis of the association between M&A goodwill and corporate total factor productivity from the perspective of listed companies as a whole, which is innovative. The further analysis of the relevant reasons remedies the lack of understanding of this aspect in the previous literature. In addition, the findings of this paper provide reflections and policy implications from three perspectives: firms themselves, regulators and investors.
Highlights
The 19th Party Congress report on the implementation of the "new development concept, the construction of a modern economic system".This is the first time in a series of important documents of our Party Congress that we propose to improve total factor productivity
Goodwill can generally be divided into two parts, one is the subjective judgment of people, such as the recognition of the company's value by customers and employees, the company's cultural value concept, and the company's brand effect, all of which will form goodwill, and these parts are often difficult to quantify ; the second is the measurement of goodwill through accounting, according to the "Accounting Standard for Enterprises No 20" issued by China's Ministry of Finance in 2006 --Business Combination" issued by the Ministry of Finance of China in 2006: "The difference in the fair value of the share of identifiable net assets of the acquiree acquired in a business combination not under common control shall be recognized as goodwill"
Heterogeneity analysis was discussed, and it was concluded that the impact of M&A goodwill on firms' own total factor productivity is more severe in small firms compared to large firms
Summary
The 19th Party Congress report on the implementation of the "new development concept, the construction of a modern economic system".This is the first time in a series of important documents of our Party Congress that we propose to improve total factor productivity. Most of the current academic studies around total factor productivity and M&A goodwill do not directly focus on the impact of M&A goodwill of listed companies on the full range of corporate factors. It triggers the thought: what relationship exists between M&A goodwill and. The subsequent structure of this paper is organized as follows: the second part is a review of the relevant literature and the formulation of the theoretical hypotheses; the third part introduces the data sources and research design of this paper; the fourth part presents the basic empirical results; the fifth part provides further mechanism discussions; and the concluding remarks and policy implications of the whole paper
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