Discussion On Performance Commitment In Private Placement Of Listed Companies

Since the promulgation of the Measures for the Administration of Securities Issuance of Listed Companies in 2006,the private placement has become the largest source of financing for listed companies with the advantages of low issuance requirements,low issuance costs and fast issuance.Many companies use private placement for project financing,mergers and acquisitions,and introduction of strategic investors to become bigger and stronger.In order to ensure the smooth implementation of the private placement plan,listed companies generally adopt performance commitments to escort private placements.In China,performance commitment is generally regarded as a valuation adjustment tool,which mainly defines the rights and obligations of both parties in a contract or contract,which helps to reduce the risk of information asymmetry in transactions,and can also promote transactions and encourage companies.Manage and build a win-win situation.As a result,more and more companies are beginning to use performance commitments in private placements,mergers and acquisitions,and the risks of performance commitments are gradually emerging.As long as the promised performance is not up to standard,the performance promise party will face the unfavorable situation of undertaking huge compensation and losing equity.Domestic research on performance commitments started late.At present,there are not many researches on performance commitments in enterprise private placement,and case studies are scarce.In this context,this paper chooses Steyr's performance commitment from the newly introduced controlling shareholder in the private placement,and through the literature on domestic private placement and performance commitments,using literature research methods,case studies and Theoretical analysis of performance commitments Fang Yingda Steel's performance commitments,performance commitments to Steyr and the reasons for the failure to achieve standards,and draw relevant implications and recommendations.Specifically,in the theoretical research part,the article first puts forward the research background and research significance,points out the important value of the performance commitment system in the research private placement;then combs the relevant literature on the private placement and performance commitment at home and abroad,and puts forward the article.The research ideas and research methods are finally summarized on the basis of the literature,from the concept,operation mode,role and risk to the orientation of the issuance and performance commitment,and analyze the motivation of the company to make performance commitments in the private placement.In the case study section,the article details Steyr's private placement plan,the profile of the performance commitment parties,the specific arrangements of performance commitments and the final performance,and analyzed the three reasons why the target company's performance is not up to standard.At the same time,it also pointed out that Yingda Steel Structure replaced the original shareholders of the target company in order to become the controlling shareholder and reduce the resistance of the private placement audit.Based on the changes in relevant financial indicators,the impact of performance commitments on business performance is analyzed.At the same time,it is found that under the pressure of high performance commitment,Steyr will use non-recurring profit and loss,high proportion of capitalization of research and development expenses,and impairment of goodwill to adjust profits and reduce the quality of corporate earnings.Under the imperfect system,performance commitments may become a tool to help some large shareholders to collect money,harming the interests of the majority of small and medium shareholders and listed companies.In light of the problems in the Steyr performance commitment case,this paper draws relevant inspirations:(1)Performance commitment parties must fully consider risks before making performance commitments,and should not be blindly optimistic;(2)Unrealistic performance commitments will Forcing enterprises to manipulate profits and reduce the quality of earnings of enterprises;(3)In the case of imperfect systems,performance commitments are difficult to protect the interests of small and medium investors.On this basis,some targeted countermeasures and suggestions are proposed:(1)Relevant departments should limit the compensation methods for performance commitments to arbitrarily change performance commitments;(2)Relevant departments should comprehensively regulate enterprise accounting standards to prevent arbitrary earnings of enterprises;(3)The relevant departments and the parties to the transaction shall improve the design of the performance commitment system,clearly define the performance capability of the performance commitment party,and assume the responsibility of the evaluation agency;(4)List the relevant responsible persons who have not fulfilled their performance commitments into the blacklist of untrustworthy,restrict their some rights,urges them to fulfill its obligations.