Research On The Relationship Between Management Conceit And Goodwill Value In Film And Television Industry

In recent years,there has been an explosive growth in M & A transactions.In many industries,there is a special phenomenon in the M & A of film and television industry,that is,film and television companies acquire the companies established by stars at a high premium.These star companies are basically "shell companies",but they can get overvalued value,resulting in a high level of goodwill value in the film and television industry as a whole.This phenomenon has caused widespread concern among the public.This paper attempts to explain the phenomenon of frequent and high premium mergers and acquisitions of star companies in the film and television industry from the perspective of behavioral economics.The film and television industry has the characteristics of high risk and strong income volatility,while the film and television industry merger and acquisition has the characteristics of excessive pursuit of star effect,poor profitability of star companies and high risk of merger and acquisition.Combined with these characteristics,this paper finds that the film and television industry management has the psychology of overestimating the star value and their ability to manage the star value and underestimating the risk of star value devaluation,which is exactly in line with the psychological definition of conceit.Therefore,the film and television industry management have egotism in the process of M & A,which can be measured by the changes in the number of shares held by the management,performance deviation and the concentration of the management’s remuneration.In order to facilitate the recognition and measurement of goodwill value,China’s accounting standards adopt the cut difference method to define goodwill value,which is the difference between the cost of business combination and the fair value of the target enterprise’s identifiable net assets.However,the goodwill value defined based on the cut difference method is likely to include the factors that can’t bring excess income to the enterprise,such as the target enterprise’s net asset profit.Therefore,in order to purify the value of goodwill,based on the definition of the value of goodwill by the method of excess earnings,this paper finds that the value of consolidated goodwill that can bring excess earnings to an enterprise includes two parts: one is the value of resources that can bring excess earnings to the target enterprise itself accumulated in the process of continuous operation;the other is the value of excess earnings generated by the integration of resources between the two parties.In the theory of core goodwill,the value of component is called the fair value of going concern and the fair value of synergy effect of merger and acquisition.Therefore,this paper adopts the definition of core goodwill value,and holds that the value of goodwill is the sum of the fair value of going concern and the fair value of synergy effect.After dividing the goodwill value of the film and television industry into two parts,it is found that the goodwill value of the film and television industry has the characteristics of over dependence on the star value.Since the management conceit of the film and television industry and the goodwill value are related to the star value,this paper proposes that the management conceit of the film and television industry will affect the goodwill value by influencing the expectation of the star value.First management conceit overestimate star value can cause they overestimate the fair value of star company’s going concern component,the second management conceit overestimate the ability to manage star value will cause they overestimate the fair value of the synergistic effect.The overestimation of both causes the overestimation of the value of goodwill.Finally,it is concluded that the risk of depreciation of star value will increase the risk of goodwill impairment.On the one hand,the high goodwill value brought by the management conceit of film and television industry represents the management’s confidence in the future development of the company and their own ability.This kind of psychology may lead to their success in investing in stars,and make the company obtain huge profits.On the other hand,it may also be affected by the devaluation of the star value,resulting in a huge impairment of goodwill,which will affect the company ’ loss,the high goodwill value of the film and television industry to the management and large and small shareholders are not balanced,the interests of small and medium shareholders lack of protection mechanism.In order to prove the above points,this paper takes Huayi Brothers’ acquisition of Dongyang Meila as an example.Through analysis and measurement,it is concluded that Huayi Brothers’ management is conceited,which will lead them to overestimate the value of goodwill based on the valuation of a famous director during the merger.When the director’s personal value is adversely affected,Huayi Brothers’ goodwill value is rapidly impaired,and Huayi Brothers cannot control the negative impact of the director’s devaluation,which eventually leads to the impairment of goodwill against the interests of small and medium shareholders.In order to restrain the phenomenon of the high goodwill value of the whole industry brought by the management conceit of the film and television industry and balance the impact of the high goodwill value on different stakeholders,this paper puts forward suggestions from two aspects: controlling the management conceit and protecting the small and medium shareholders,in order to solve the problem.