Research On The Value Creation Effect And Impairment Risk Of Ninestar's Goodwill

In order to realize the transformation and upgrading of industrial structure and the developing demand of expanding and extending the industrial chain,in recent years,many enterprises in China have frequently pursued the development through mergers and acquisitions(M&A).However,once the performance of M&A fails to meet the expected return and the goodwill is impaired,the corporate performance will be greatly affected.Since 2015,M&A with high premium appeared in China's capital market frequently.Huge amount of goodwill has forming a barrier lake that create a huge risk hazard to the enterprises and the capital market.In view of this,in order to strengthen the supervision of the impairment of goodwill,China Securities Regulatory Commission(CSRC)issued the "Accounting Supervision Risk Warning No.8-Goodwill Impairment" on November 16,2018.It can be seen that how to accurately identify the risk of goodwill impairment and take corresponding preventive measures has become an urgent problem to be solved in the integration process of M&A.By combing the literature,we find that the research on the essence of goodwill is relatively mature.The value creation mechanism of goodwill and the economic consequences of goodwill impairment are the focus of current research,but the research on the risk of goodwill impairment is relatively small,which mainly stays at the theoretical level or on accounting standards aspect,lacking systematic analysis of specific cases.Therefore,based on the theoretical analysis,this paper studies the goodwill generated by Ninestar's acquisition of Lexmark.Based on the analysis of the value creation effect of goodwill,this paper identifies whether Ninestar's goodwill is facing the risk of impairment.This paper analyzes the influencing factor of goodwill impairment risk from the aspects of background,scheme design,corporate differences and integration capabilities,and explores the corresponding prevention measures.Specifically,based on efficiency theory,bounded rationality and conceited hypothesis,this paper analyzes the theoretical logic of the formation and impairment of goodwill in M&A.Secondly,Through the research of related materials,this paper understands the background,motivation,trading plan and the basic situation of the formed goodwill of Ninestar.Thirdly,from the perspective of synergy,this article analyzes the value effect of the goodwill formed by Ninestar's acquisition of Lexmark.It is found that after this merger,Ninestar faces the problems of unstable profitability and a significant reduction in solvency.In this case,the value creation effect of goodwill is limited.The study found that the unstable macro environment,high premium,debt burden from multi-tier financing,the poor post-merger target performance,the corporate differences and integration capabilities are all factors that take the risk of goodwill impairment in the merger.Lastly,this paper proposes corresponding preventive measures and suggestions for the impairment risk of goodwill from the case company itself,supervision and accounting standards aspects.The main contributions of this paper are as follows:(1)This paper conducts a systematic study on the formation mechanism of goodwill impairment risk,which makes up for the shortcomings of previous studies that are mainly limited in accounting standards aspect,and further enriches the research on the risk of goodwill impairment.(2)Through the analysis of the case of Ninestar's acquisition of Lexmark,this paper explores the influencing factors of the impairment risk of goodwill,and proposes corresponding preventive measures to provide reference for other enterprises in the same dilemma.Therefore,the risk of goodwill impairment is reduced to a certain extent,and the stable development of China's capital market is guaranteed.