CEOs’ Educated Youth Experience and Corporate Mergers and Acquisitions Premium: An Empirical Study Based on the Branding Theory

Abstract

This study extends the strategic decision of the company to the historical research field. By collecting and sorting out the mergers and acquisitions events of Chinese listed companies from January 1, 2006 to December 31, 2016, the impact of CEOs’ educated youth experience on corporate mergers and acquisitions premium is studied. The results of this study show that the CEO who has experienced the Educated Youth Movement during the sensitive period is more inclined to pay a high mergers and acquisitions premium. Further, this paper explores the role of CEO education level, the company’s relative performance level and environmental uncertainty in the relationship between CEOs’ educated youth experience during the sensitive period and the corporate mergers and acquisitions premium. It is found that: First, the scientific training that a highly educated CEO receives in the learning process can correct his overconfidence tendency, and has a significantly negative adjustment effect on the relationship between the educated youth experience and the corporate mergers and acquisitions premium. Second, the higher the relative performance level of the company, the past success makes the CEO more convinced that he has higher skills than others and greater control over the future, which tends to pay a higher premium in mergers and acquisitions. Third, the stronger the environmental uncertainty of the company, and the higher the frequency, the faster the speed and the stronger the fuzziness of the information the CEO receives, the CEO is more willing to accept the information that is consistent with his expectations, strengthen his overconfidence, and pay a higher premium in mergers and acquisitions.