The main theory of M&A enterprise theory

Many western scholars have done a lot of theoretical research on the motivation and social effects of corporate mergers and acquisitions from different angles. A variety of theoretical hypotheses have been put forward, forming a relatively complete theoretical research system. There are mainly the following five types: Theoretically, M&A activities are caused by the conflict between managers and shareholders in the expenditure of free cash flow. In order to maximize the efficiency of a company, free cash flow must be paid to shareholders, which directly weakens the management's control over the cash flow of the enterprise. When managers raise funds for investment activities, they are more likely to be supervised by the public capital market. This is essentially due to the conflict of interests caused by agency problems, and mergers and acquisitions can help reduce these agency costs.