IDEAS home Printed from https://ideas.repec.org/a/eee/intfin/v110y2026ics1042443126000697.html

A friend indeed? The effect of regulatory shareholder on overpayment in mergers and acquisitions

Author

Listed:
  • Lian, Lishuai
  • Huang, Haijie
  • Kyaw, Khine
  • Lee, Edward

Abstract

To protect minority shareholders, China introduced the China Securities Investor Services Center Co., Ltd. (CSISC), which has become a quasi-regulatory minority shareholder in listed companies. This regulatory innovation offers a unique opportunity to investigate a novel approach that regulators worldwide can adopt to protect minority shareholders’ interests. We find that the CSISC protects the interests of minority shareholders during particularly vulnerable periods, such as mergers and acquisitions (M&As). Specifically, excess goodwill, a proxy for overpayment in M&As, is lower when CSISC activism is present. This decrease is economically significant, showing a 33.86% reduction in excess goodwill in M&As involving CSISC activism. Moreover, this effect is more pronounced in firms with greater mispricing, poorer information environments, and fewer political connections. Our findings suggest that the CSISC is an effective protection mechanism for minority shareholders.

Suggested Citation

  • Lian, Lishuai & Huang, Haijie & Kyaw, Khine & Lee, Edward, 2026. "A friend indeed? The effect of regulatory shareholder on overpayment in mergers and acquisitions," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 110(C).
    • Handle: RePEc:eee:intfin:v:110:y:2026:i:c:s1042443126000697
    DOI: 10.1016/j.intfin.2026.102353
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1042443126000697
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.intfin.2026.102353?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:intfin:v:110:y:2026:i:c:s1042443126000697. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/intfin .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.