Research On The Motivation And Economic Effect Of JANGHO Group’s Spin-off

In the 1960s,the western capital market set off a wave of mergers and acquisitions.Many enterprises choose diversification by way of merger,acquisition and reorganization of business synergies,but not all of the enterprises in the merger wave can get positive synergies.Under the condition of the enterprise scale expanding rapidly,because of blind M&A,many enterprises have the problems such as governance mechanism is low,wasting resources and so on.It’s not only makes it hard for business synergies to achieve,or even have negative influence on enterprise’s economic value.Spin-off listed as a kind of assets reorganization,it basically is divided enterprise to streamline the scale,in order to achieve the goal of 1 + 1 > 2.As more and more enterprises are spin-off and listed in the capital market,domestic and foreign scholars are deepening their research on spin-off and listed.However,due to the strict supervision of spin-off in China,there are few successful spin-off cases so far,and most of them are large-scale enterprises such as state-owned enterprises,which leads to serious homogenization of domestic scholars’ case studies on spin off and listing,and relatively lack of domestic case studies on small-scale private enterprises.Based on the case study of JANGHO group’s spin-off of its subsidiary listed in A-share market,this paper uses the methods of event study,non-financial index analysis and financial index analysis to analyze the motivation of JANGHO group’s spin-off of Sundart group and SLD design group and the impact of the spin-off on the economic effect of its parent and subsidiary.Through the analysis of relevant data,based on the industry and strategic objectives of JANGHO group,this paper concludes that the main reasons for the two splits of JANGHO group are to ease the financing pressure,carry out management incentive,further achieve strategic objectives and enhance enterprise value.After the spin-off,the parent and subsidiary companies have changed in the aspects of operation ability,financing ability and management ability.The spin-off also has a positive impact on the brand awareness,management incentive and human capital of the parent and subsidiary companies.By comparing the economic effects of the two divestments,we can draw a conclusion that due to the differences in business models and asset scales between Sundart group and SLD design group,the economic effects of the two divestments are different.Through the research on the motivation and economic effect of JANGHO group’s spin-off,this paper summarizes the experience of relevant spin-off and issues that need attention,such as reasonable use of spin-off,careful selection of spin-off objects and reasonable planning of enterprise development after spin-off.