Performance Compensation Commitment, Innovation and Corporate Performance—Evidence based on Major M&A Events

Taking the major M & A events from 2007 to 2016 as samples, combining the data of the content of performance compensation commitment（PCC） by collecting the announcement documents of each merger in SSE and SZSE, the effect of PCC on enterprise innovation and corporate performance in reorganization was studied. Using propensity score matching （PSM） and difference-in-differences （DID） methods, the empirical results show that, the PCC agreement of major shareholders has a negative correlation with the investment level of innovation after M compared with non-innovative firms, the negative effect of the PCC on innovation firms is stronger; further study shows that the PCC agreement is positively correlated with the short-term performance, but is negatively correlated with long-term performance after M&A. The conclusion of this paper will help to improve the design of specific terms of PCC agreement, and provide reference for the application of PCC agreement in M&A, which is of great significance to mutual benefit.