The Influence Of Performance Commitment On Financial Fraud Researching On A Case Study Of Yabaite

In recent years,with the gradual improvement of the capital market,mergers and acquisitions have become more common in China.Performance commitment has also been widely used as a contract in mergers and acquisitions.The original intention of the China Securities Regulatory Commission to establish a performance commitment system is to establish a punishment mechanism for counterparties to inhibit the false profit forecast in mergers and acquisitions process and the insufficient protection of the interests of investors who have fewer shares.At first,a reasonable performance commitment played a positive role in the valuation adjustment and motivating managers.However,in recent years,with the emergence of high premium and high performance commitment in mergers and acquisitions,it's common that many companies have failed to meet the performance commitment standards,and evaded compensation.Under the huge pressure of performance commitment,the system also generates some new risks.In order to avoid the failure of performance commitment and stock or cash compensation,many enterprises adopt multiple methods to achieve performance commitment standards,by earnings management and even financial fraud,not only harm the interests of investors who have fewer shares,but also affect the healthy operation of the capital market.The article selects Yabaite as the case study object,from the perspective of performance commitment and financial fraud as the entry point,analyzing the case in four aspects: the performance commitment motivation of companies,the effect of performance commitment on listed companies,and the mechanism of performance commitment on financial fraud,and the risk of financial fraud in Yabaite.Besides,using big data samples to summarize the impact of performance commitment on financial fraud.The purpose of this study is to find the correlation between performance commitment and financial fraud,and summarize the mechanism of performance commitment to induce financial fraud.The research conclusions are as follows:(1)M & A companies obtain high valuations by making high-performance commitment that deviate from their actual capabilities.In turn,high valuations also promote high-level performance commitments.Performance commitment which deviates actual profits hide huge risks.When it's expected that it will be difficult to complete performance commitment in the future,companies are motivated by incentives such as completing the contract,avoiding compensation,evading supervision,and having access to financing opportunities to achieve the standards by financial fraud.(2)The performance commitment has the problems of single index and short period;after the backdoor has been completed,under the control of major shareholders,the company has a self-evaluation issue on the disclosure of performance commitment,and the failure of internal control makes the disclosure of performance commitments internal supervision ineffectively;and the CSRC has not conducted effective external supervision on the performance commitment in mergers and acquisitions,all of which provide opportunities for corporate financial fraud.(3)Enterprises make aggressive performance commitments,indicating that managers may pay more attention to the short-term performance of enterprises,which constitutes an attitude and an excuse for performance commitment to financial fraud.(4)Performance commitment have influence on corporate financial fraud,but performance commitment does not necessarily lead to financial fraud.During the commitment period,companies tend to improve their profitability compared to companies that did not make performance commitment.At last,this article puts forward suggestions on how to use performance commitments in mergers and acquisitions reasonably and prevent financial fraud from the perspective of performance commitment.