Research On Performance Commitment And Earnings Management Behavior In M&A Restructuring

With the increasingly fierce competition in the market,more and more enterprises choose to make better development through mergers and acquisitions.In recent years,domestic mergers and acquisitions and reorganization transactions have shown explosive growth.In order to reduce the risk of mergers and acquisitions,most transactions have performance compensation commitment agreements.However,the performance commitment system in China started late,and it was formally put forward in the management of M&A and reorganization in 2008.Today,there are many imperfections,which brings many opportunistic behaviors to the target company.In order to achieve promised profits and avoid high penalties,the target company will choose earnings management to beautify its performance,which seriously affects the interests of listed companies and small and medium shareholders.Therefore,it is very important to study the performance commitment and earnings management behavior in M&A and reorganization.In this paper,Shanghai mingjiang,whose performance suddenly "changes face",is selected for case study.Firstly,it introduces the background and significance of this topic,puts forward the research ideas and methods,introduces the innovative points of the topic,and combs and reviews the domestic and foreign literature on performance commitment and earnings management.Secondly,it introduces the concepts of performance commitment and earnings management,as well as incomplete contract theory,information asymmetry theory,principal-agent theory,signal transmission theory and incentive theory,which provide theoretical basis for the following case studies.Then,the specific case of the Yellow River Cyclone merger and acquisition of Shanghai Mingjian is introduced,and the performance commitment scheme of the merger and acquisition as well as the completion of the performance commitment of Shanghai Mingjian are elaborated.Then,this paper analyses the internal and external motivations of earnings management behavior of Shanghai Mingjian during performance commitment period,identifies the earnings management behavior of Shanghai Mingjian caused by performance commitment from two perspectives of financial and non-financial indicators,and summarizes three specific means of earnings management behavior of Shanghai Mingjian.Finally,the paper analyses the damage to listed companies and small and medium-sized investors caused by Shanghai Mingjian's earnings management behavior,and puts forward some suggestions on restraining the earnings management behavior during the performance commitment period from the perspective of listed companies and regulatory agencies.Through this study,it is found that during the three-year performance commitment period after being acquired by the Huanghe Whirlwind,Shanghai Mingjian mainly adopted this method to manage earnings:confirming sales revenue in advance.The main motivation of earnings management behavior of Shanghai Mingjian is to fulfill performance commitments and avoid high compensation.At the same time,its parent company,Huanghe Whirlwind,has too much trust in Shanghai Mingjian,lacks management,and the punishment of earnings management behavior by Chinese regulatory agencies is relatively small,which also provides Shanghai Mingjian with the opportunity to adopt earnings management.The target company may use earnings management to help the company achieve profit targets in a short period of time,but in the long run,earnings management behavior can not really make the enterprise profitable.When the earnings management behavior is exposed,the company's profits will be greatly discounted,the stock price will be greatly reduced,the parent and subsidiary companies will suffer serious losses,harmful to the issuance of enterprises.Exhibition.Therefore,in order to prevent the earnings management behavior of the target enterprises,this paper suggests that listed companies should enrich the commitment indicators,extend the commitment period,and strengthen the financial control of the target enterprises when signing performance commitments with the target enterprises.At the same time,the supervisory authorities should strengthen the punishment of the earnings management behavior of enterprises,so as to increase the cost of earnings management and reduce the possibility of earnings management.Energy.It is expected that the research and analysis in this paper can provide reference for the research on performance commitment and earnings management in China.