Equity structure, private benefit and M&A decision: A model based on Agency Theory II

Based on the framework of Agency Theory II, we focus on the private benefit of large shareholder´s control right and construct a model which can illustrate how M&A decision can be impacted by acquirer´s equity structure. The model internalizes large shareholder´s private benefit as a function of the shareholding ratio and specifies the mechanism through which large shareholder´s shareholding ratio and ownership concentration impact the M&A decision. This paper provides theoretical foundation for those empirical literatures which analyze the M&As from the perspective of Agency Theory II.