How Does Equity Structure Impact M&A Decision? a Model Based on Private Benefits

Abstract:

This paper focus on the private benefit of large shareholder’s control right within the framework of Agency Theory 2 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 2.

• Periodical: Advanced Materials Research (Volumes 271-273)
• Pages: 742-747
• DOI: https://doi.org/10.4028/www.scientific.net/AMR.271-273.742
• Online since: July 2011
• Authors: Zhang Jia, Li Yan Han
• Keywords: Equity Structure, M&A, Private Benefit

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