Abstract:

Using M&A deals initiated by Chinese firms from 2012 to 2016, this study examines the impact of CEO equity incentives on acquiring motives and short-term performances based on the perspectives of environmental uncertainty and major shareholder-controlling in emerging market economies. The results show that, CEO equity incentives can promote the acquisition investments and positively related to acquiring returns, however, this effect is only evidenced in the subsample of private owned firms. Under high environmental uncertainty, the equity incentives cause egoistic and risk-taking investments which lead to more serious agency problems. The major shareholder-controlling of private owned firms can reduce manager opportunism in M&A and enhance the effects of equity incentives.