Analysis On The Motivation And Effect Of Performance Compensation Commitment In Mergers And Acquisitions

With the wave of M & A and the management measures for major asset restructuring of listed companies,performance commitment is gradually accepted by the market.The motivation of performance commitment is to solve the information asymmetry in M & A transactions,protect the interests of investors,stimulate the subjective initiative of the commitment party,so as to safeguard the interests of both parties.With the introduction of the policy,more and more enterprises sign performance commitment,and even become a kind of industry practice.However,with the increase of the number of performance commitment,the negative effects of performance commitment are gradually emerging.High performance,high valuation and high premium make it difficult for enterprises to achieve the promised performance,which not only does not protect the interests of small and medium-sized shareholders,but also benefits the enterprises and their shareholders.They have caused huge losses,which is not conducive to M & A transactions to a certain extent.In this regard,the motivation of signing performance compensation has changed accordingly,and the economic consequences of performance compensation have become the focus of attention.On the basis of studying and summarizing the research results of scholars,this paper analyzes the motivation of enterprises signing performance commitment from the perspective of enterprises,and finds that enterprises have signed two performance compensation commitments before signing the performance compensation commitment.Therefore,this paper first infers the real motivation of enterprises signing the performance compensation commitment based on the previous results.Secondly,it analyzes the realization effect reflected in market reaction,operation ability and financial effect after signing performance compensation commitment,and judges whether the enterprise has achieved the purpose of signing performance compensation commitment.Finally,it deeply studies what causes the enterprise’s expected motivation not to achieve if the purpose of signing performance compensation commitment is not completed And give constructive suggestions.Finaly,this paper finds that(1)the frequent M & A of Xinhua medical makes it not get positive market reaction when it signs performance compensation commitment under the condition of high overvalued premium;(2)the performance compensation commitment under the condition of high overvalued premium makes the enterprise have a high risk of goodwill storm,and once the performance commitment fails,it will cause a great negative impact on the enterprise;(3)the unreasonable setting of high performance commitment in M & A,without considering the impact of other environments,makes it difficult for enterprises to achieve in the actual situation,and the failure of performance commitment compensation will cause serious economic losses to enterprises,and make investors lose confidence in enterprises.Based on this,the paper puts forward some suggestions and Countermeasures:(1)improve the performance commitment information disclosure requirements;(2)expand the performance commitment system;(3)strengthen the supervision of performance commitment;(4)improve the performance commitment policy...