Research On The Goodwill Impairment Of Zeus Entertainment

With the continuous development and improvement of China’s capital market,more and more listed companies are keen on M & A,high premium M & A has become a common phenomenon,resulting in a sharp rise in the total goodwill of Listed Companies in China,which has exceeded trillion yuan.The potential impairment risk behind goodwill has become a performance mine that listed companies may detonate at any time.In recent years,there are many cases of goodwill impairment loss in listed companies.The provision of goodwill impairment will directly affect the performance of the company and the fluctuation of stock price,and aggravate the uncertainty of future earnings,which will bring huge impact to the capital market itself.How to prevent the risk of goodwill impairment is very important for the current capital market.The existing research shows that good internal control limits the opportunistic motivation of the management of listed companies and improves the value relevance of impairment information.As an important governance tool to improve the internal management of enterprises,internal control has the functions of improving the information quality of enterprises,improving business efficiency and strengthening risk management and control,which can effectively prevent the risk of goodwill impairment.The existing literature seldom considers the problems existing in the internal control of corporate goodwill impairment,and the effect of internal control on goodwill impairment may also involve the whole process of M & A.This paper studies the devaluation behavior of Zeus Entertainment’s goodwill from the perspective of internal control.First,the domestic and foreign research status and theoretical basis of goodwill impairment and internal control are sorted out,and the impact of internal control on goodwill impairment is laid,which lays the foundation for case analysis.Secondly,it organized and analyzed the formation of the goodwill of the case company’s merger and acquisition and its impairment,and the economic consequences of the impairment of goodwill.Thirdly,from the five elements of internal control,that is,the control environment,risk assessment,control activities,information and communication,and monitoring,the problems of Zeus Entertainment’s goodwill impairment behavior are studied.The analysis shows that there are major defects in the company’s internal control system,mainly in the following aspects: problems in the company’s equity structure,management concept and management style,blind selection of M & A objectives,overestimation of M & a valuation,neglect of authorization control,utilization of subsequent measurement,inadequate disclosure of goodwill information,blocked information communication channels and lack of monitoring functions.Finally,based on the results of the case analysis,it puts forward targeted suggestions to strengthen the company’s internal control mechanism,prevent the occurrence of large-scale merger and acquisition of goodwill,and reduce the risk of goodwill impairment.It is hoped that the research in this article can provide some reference for listed companies to prevent the risk of impairment of goodwill and promote the healthy development of mergers and acquisitions.