Relationship between Bargaining Power and M&A Efficiency – Analysis Based on Two-Tier Stochastic Frontier Model

Abstract

As a kind of behavior that can produce synergy effect, improve management efficiency and gain scale benefit for enterprises, merger and acquisition (M&A) is an important way for enterprises to optimize resource allocation in the capital market. For enterprises, M&A efficiency is an important indicator to measure the effect of M&A. A large number of studies have analyzed the impact of M&A activities on enterprise efficiency in the short and long term from the change of financial indicators after M&A. However, few studies have analyzed the impact of bargaining power on M&A efficiency. Through the establishment of two-tier stochastic frontier model, we explore the influence of bargaining power on M&A efficiency and further investigate the deviation degree of M&A efficiency caused by bargaining power of both parties based on the sample of China's A-share listed companies in 2015-2018. The study concludes that there is a significant positive correlation between the bargaining power of the enterprises and the efficiency of M&A. We further find that the market competition intensity has a moderating effect on the relationship between the bargaining power of enterprises and the efficiency of M&A.