Study On Motivation And Economic Consequences Of Listed Companies’ Asset Divestment

In the context of more and more companies showing a diversified development trend,it is true that all-round and multi-layered development can reduce the risks caused by the business scope being too limited in a certain fixed field,which is conducive to achieving a more stable development of the enterprise.However,if we expand blindly without paying attention to the synergy between industries,and without correspondingly adjusting the organizational structure of the enterprise and reconsidering the optimal allocation of resources,not only will it not be able to improve the efficiency and value of the enterprise,but will cause frequent problems,such as excessive business dispersion,difficulties such as continued decline in performance and low market valuation.Because of that,asset divestiture,a method of asset restructuring,has emerged at the historic moment.In recent years,the examples of domestic listed companies adopting asset divestiture have been climbing,playing an irreplaceable role in the capital market.However,in this process,there is no lack of negative market behavior that uses asset divestiture as a capital operation method for earnings management and the transfer of interests to major shareholders.Therefore,how to use asset divestiture to restructure the company to help the company make strategic transformation and return to the right track while preventing the risk of large shareholders emptying the listed company has become a significant realistic proposition.This paper chooses the strategic divestiture process of TCL Tech as a case study because of its outstanding transformation results,and this divestiture has made a subversive change to the main business of listed companies.At the same time,it has aroused heated discussion in the society because of the imbalance between revenue and price of the divestiture business,which is of research value.In the part of case introduction,it introduces the development characteristics and general situation of home appliance industry and display panel industry in turn,as well as the development strategy and business overview of TCL Tech.In the part of case analysis,it mainly analyzes the background,motivation and characteristics of TCL divestiture,and studies the economic consequences of divestiture from four aspects: market reaction,financial performance,governance level and potential risk.The study found that the motivation of TCL Tech divestiture is mainly based on the development trend of the industry and the company’s own strategic positioning to achieve contractionary centralization and the need for optimal allocation of resources,while recovering cash to alleviate the pressure of liquidity and improve the capital structure,and committed to change the previous grocery store-style diversification pattern,improve stock valuation.In terms of economic consequences,the A-share market reacts negatively,the financial performance has not been continuously improved,and the ability of corporate governance has been optimized.However,there are also some potential risks,such as the divestiture buyer is a related party,the valuation and pricing of the divested assets is controversial,the future development of the retained subject business is in doubt,and the violation of the letter may lead to the hollowing out of the company by major shareholders.Finally,this paper summarizes the divestiture behavior and its economic consequences,finds the potential problems,and puts forward targeted improvement suggestions in order to provide reference for the transformation of manufacturing enterprises and other enterprises that intend to carry out strategic contraction.