Analysis Of Risks And Causes Of Performance Compensation Commitment In Listed Companies’ M＆A

Since the reform and opening up,the number of mergers and acquisitions in the domestic market has continued to increase,and performance commitments have become the focus of many investors.In recent years,the performance of the target company after the reorganization has not reached the standard during the commitment period,and listed companies have not been compensated according to the agreement which has not only had a negative impact on the restructuring market,but also further harmed the interests of the acquirer and small investors.At present,the regulatory authorities have formulated a lot of laws and regulations on this phenomenon,and listed companies also need to establish a more comprehensive understanding of performance commitments and compensation agreements to reduce the risks generated by mergers and acquisitions,and increase the value of them.This paper firstly introduces the background of the research problem,and the concepts and theories related to mergers and acquisitions,earnings management which lays the foundation for the content of the research.Then gives a more comprehensive description and summary of the current status of literature research at home and abroad to expand on the research on the risks brought to the acquirer by the performance commitment compensation agreement in mergers and acquisitions by three kinds of methods as literature analysis method,case analysis method and event research method.First,this article introduces the status of cross-industry mergers and acquisitions,the performance of performance commitments,and the content as well as form of performance compensation.Data and charts show that listed companies are inclined to acquire additional performance commitments,but there are more and more situations that performance commitments cannot be fulfilled with compensation often unable to be performed according to the agreement.Therefore,the CSRC has made changes to the performance commitment compensation agreement setting and implementation.Then it introduces the situation of the two parties,the motivation for the acquisition,the meaning of raising fund and issuing shares during the acquisition,and the content of the performance commitment compensation agreement.Then briefly introduce the performance of the Shanghai Mingjiang after the M&A and the impact on the listed company on the internal and external aspects: not only the profitability and liquidity of Huanghe whirlwind company has been falling for two consecutive years,it has also hurt the confidence of listed company shareholders and potential investors.Then it introduces the current compensation situation of the Huanghe whirlwind by the compensation obligor and analyzes the risks induced by performance commitments and compensation agreements and their causes,including manipulating performance commitment risk,earnings manipulation,contract performance risk.Finally,based on the above-mentioned risk analysis,the feasible suggestions for risk control are put forward which are to strengthen the disclosure and supervision of the performance commitment setting basis;optimize the performance commitment assessment and establish risk identification and response mechanism;extend the unlocking period of the shares of promised party to guarantees the ability to perform compensation and introduce performance compensation supplementary clauses;strengthen the supervision of M & A intermediaries in performing their duties.This article analyzes the risks induced or brought about by performance compensation agreements in the context of mergers and acquisitions,proposes preventive suggestions or countermeasures,and expands the research perspective of performance compensation in theory.It also provides other companies that will sign performance compensation agreements in mergers and acquisitions with the references to promote the effective use of performance commitment compensation agreements.