Research On Performance Commitment Compensation Methods And Protection Of Minority Shareholders' Interests In Major Assets Restructuring

In recent years,with the continuous development of China's capital market,more listed companies have realized the leap-forward development or transformation through the implementation of major asset restructuring.Performance commitment has become a relatively common institutional arrangement in China's major asset restructuring,but the completion of performance commitments is not optimistic.Exaggerated performance commitments and unfulfilled promises in asset restructuring continue to occur,undermining market order and infringing on the legitimate rights and interests of investors.When the performance target cannot be fulfilled,the result is the trigger of the performance compensation commitment agreement.In practice,the promised party can compensate the listed company by various compensation methods,mainly including cash compensation,share compensation,and mixed compensation of cash and shares.However,what is the difference between the different compensation methods for the protection of minority shareholders' interests? Can performance commitments also reflect the original intention of protecting minority investors? It is necessary to conduct further research on these issues.The paper starts with the relevant literature and theory,then analyzes the status quo of China's major asset restructuring and performance commitments in 2014-2018,and summarizes relevant regulations.According to the above,two cases were adopted in the research design.Namely,Hanwei Electronics and Red Arrow represent two different compensation methods respectively: cash compensation and share donation compensation,analyzing the influences of different compensation methods on the interests of minority shareholders from five perspectives: equity change,financial indicators,cumulative excess return rate,major shareholder cost return and asset impairment compensation.After research,three conclusions are drawn: First,the share compensation method is better for the protection of minority shareholders than the cash compensation method.Second,in the share compensation method,the share donation compensation has better protection effect on the minority shareholders than the stock repurchase compensation,and is more approved by the minority shareholders.Third,the performance commitment of setting up asset impairment compensation has a protective effect on minority shareholders,but its protective effect is still related to the compensation method.According to the above conclusions,put forward suggestions from the perspectives of companies,regulators,intermediaries and minority shareholders.This paper has two main contributions: first,in terms of theory,it made an early study on the different performance commitment compensation methods' protective effects on minority shareholders' interests.In terms of scope,different from existing literature,it mostly studied the performance commitment in M&A,while this paper further studied the scope of material assets reorganization.Second,in the practical aspect,through the study of different performance commitment compensation methods,it is found that share donation compensation is more beneficial to minority shareholders,and the cash compensation can enable the promiser to reduce the compensation responsibility to a greater extent.The study can provide ideas for understanding the measures that the regulatory layer prohibits to change performance commitments and the use of performance commitment compensation methods.This research also has some inevitable limitations,mainly lying in the following three points: first,this paper only conducts a case study on cash compensation and share donation compensation.Though Hypothetical comparative analysis is used in concrete analysis to compare the above two compensation methods with share repurchase compensation,but it is still difficult to overcome defects that share repurchase compensation is not represented by case study.Second,since this paper is based on a case study,the universality of the conclusions needs to be empirically studied with large samples in the future.Third,both of the two case studies in this paper are one-way compensation protocols in performance compensation commitments,rather than two-way compensation protocols,so the research scope is limited to some extent.