Research On The Motivations And Performance Of YUM's Spin Off

In the 60 's,enterprises were keen on large-scale mergers and acquisitions,through a large number of horizontal,vertical and mixed mergers and acquisitions,created a series of largescale diversified multinational enterprises,meanwhile caused the efficiency problems among some enterprise due to the expansion of enterprise boundary.With the diversification of enterprises,different departments can not be a good synergy between different subsidiaries which may be located the enterprise life cycle in different stage,as the only subject in the capital market of the company's incomplete disclosure of subsidiary information may lead to the undervaluation of the corporate value of these enterprises.Thus,as a way to solve the problem of excessive diversification,the spin off and listing has come into being and is widely adopted by many enterprises.China's market economy and capital market started late,the main target of the market is to solve the problem which make the enterprise bigger and stronger for a long time,the demand for spin-off is not strong,at the same time,the special location and development situation of the early capital market of our country lead to the practical operation of the enterprise to take the strategy of In 2010,the SEC proposed a carve out of six provisions,is a technical guide to the listing of domestic companies,postponed the introduction of registration reform at the meeting of the NPC Standing Committee in 2018,and actively addressed the issues such as delisting mechanism,regulation,information disclosure and the protection mechanism for small and medium investors needed for the registration reform.To promote the improvement of the basic supporting policies of China's capital market.The introduction of these new policies will be a positive factor for China's enterprises to carve out and spin off listing operation.Yum is a NYSE-listed company that split the Chinese business unit in 2016,and the spin-off China Company also listed on the NYSE which named Yum China.This paper takes Yum and Yum China as a case study to analyze the cases of spinoff listing in mature capital market.By using the theory of literature to study the basic theoretical basis of the listing,the reasons for the listing and the performance problems,this paper analyzes the process and motivation of Yum by case analysis,and uses the financial Index analysis method and event research method to analyze the performance problem of the case company.After research,this paper puts forward that the reasons of Yum 's listing of listed restaurants are to widen the subsidiary's financing channel,to realize the normalization of the parent-subsidiary business,to solve the asymmetric information,to motivate the management,to localize and to realize the Internet and to maximize the shareholder's equity.Yum and Yum China are more single-minded in China after the spin-off,Yum China has achieved expansion of the capital needed for further business expansion,asset-liability capacity and profitability have been improved;Yum is more focused on the model of Light asset operation,further reducing the enterprise risk and improving the stability of corporate profitability.After the spin off listing,the two companies are operating in good condition,and the announcement of the spin off has brought short-term excess profits to the enterprises.From the case company's operating condition and the capital market reaction two aspects appraisal,the spin off all further expands the company shareholder's interest,has achieved certain success.Through the case study of the spin-off of Yum Restaurant,it provides some references for Chinese enterprises to use the spin off as a strategic transformation and improve the performance of the business.At the same time,the paper also sums up the negative effects and potential risks caused by the spin off case companies,in general,Yum has achieved a certain success in the spin-off,and has obtained good results.