The impact of performance compensation commitments on mergers and acquisitions (M&As) has been widely discussed, but has no consistent conclusions. By investigating M&A events among A-share firms from 2011–2015, we found an inverted U-shaped relationship between performance compensation commitments and M&A performance. The PSM is firstly used to select a paired sample of firms’ signing performance compensation commitments, which is used to test the incentive effect of signing performance compensation commitments. Secondly, the different impact paths of performance compensation commitment on M&A performance are tested empirically. The study found that: (1) the signing of performance compensation commitment agreements is more likely to increase the M&A price, resulting in a “high premium”; (2) M&A premiums and performance compensation commitments are helpful to improve the short-term effect of M&A performance. However, in the long run, M&A premiums and performance compensation commitments reduce M&A performance, which means that performance commitments have an inverted U-shaped effect on M&A performance. This study enriches our understanding about the impact of performance compensation commitments on M&A performance and has important implications for institutional construction and the protection of small and medium-sized businesses.