Does manager overconfidence drive Chinese listed companies´ M&A activities?

Merger and acquisition (M&A) becomes common in capital market. This paper attempts to study the relation between manager overconfidence and M&A of the listed companies based on the perspective of managers´ behavior by employing the sample of A-share listed firms with M&A behavior from 2006 to 2011 and by building Logit model. The results show that: (1) manager overconfidence does induce M&A of Chinese listed companies. Specifically, when manager overconfidence is higher, more possible of the M&A decision is made. (2) Given the fact of manager overconfidence, the worse of the corporate governance level, the more active of merger and acquisition is. In addition, this paper divides the corporate governance level to 7 variables, and studies the relation between 7 variables and M&A decision.