Study On Accounting Problems Of Performance Compensation Clauses In M&A Transactions

As our country's economic transformation deepens gradually,more and more listed companies hope to expand their scale and increase their competitiveness in the capital market through mergers and acquisitions.M&A transactions have developed rapidly in recent years.Due to the information asymmetry between the two sides of the M&A transaction and in order to better protect the interests of investors,contingent consideration appears.And the performance compensation clause is one of the common forms.In recent years,performance compensation clauses have gradually been legally obtained,but the latest accounting standards for business enterprises have not yet made clear provisions on the accounting treatment of performance compensation.Performance compensation is contingent consideration or contingent assets,or as an equity transaction,current guidelines and related practice guidelines haven't reached to a clear provision.Nowadays,the accounting treatment of performance compensation issues is serious.In this paper,by reading papers and domestic and international financial accounting standards,the cases of performance compensation are classified according to different compensation methods and performance commitment parties.Then,personal opinions are put forward for each type of accounting treatment,and on this basis,I chose one typical case to analyze in detail.Based on the case study,this article summarizes some of the accounting problems commonly encountered in practice,and proposes countermeasuresIn this paper,the following conclusions are drawn through case analysis: First,in the process of the initial confirmation and subsequent measurement of performance compensation,comprehensive consideration must be given to various factors such as the trading object,performance compensation method,commitment period and operating uncertainty.The measurement of value is still quite difficult.Second,based on the contingent consideration criteria,the cash compensation is handled according to the “profit and loss trading view”,the stock compensation is treated according to the “equity transaction view” generally,and special transactions need to be renewed according to the principle of substance and form by judging the nature of its transactions;Third,under the recognition of contingent prices,the requirements for accounting and information disclosure of companies are higher,and the quality requirements for financial personnel are higher,too.Different performance compensation methods will have different effects to financial statements and for small and medium investors.Finally,this article puts forwards some suggestions to corporate finance personnel and management,norm development departments,and regulatory agencies,which can help better play the role of performance compensation in M&A transactions.