Media Enterprise Gambling Agreement And Goodwill Impairment Risk From The Perspective Of High Premium

The development of non-traditional industries have been injected vitality from "The Supply-side Structural Reform"."Administrative Measures on M&A of Listed Companies" revised in 2014 simplifies merger and acquisition licensing,making M&A becoming the main way for companies to seek development.Considering the "asset-light" characteristics,for the film and television industry,the income method is frequently employed in the valuation of M&A,causing a high premium.In order to reduce operational uncertainty,most companies will sign a gambling agreement during M&A,requiring the target company to make an optimal performance commitment and stipulate compensation measures.This article takes Huayi Brothers’ acquisition of Dongyang Meira as the research object,and mainly analyzes the causes and consequences of high goodwill impairment risks in the film and television industry,and the effectiveness and limitations of gambling agreements to prevent goodwill impairment risks.The research has found that,the high goodwill impairment risk is mainly due to the choice of valuation methods,industry inherent risks,and performance commitment settings.For the effects of the agreement preventing the goodwill reduce risks,the capital market is suspicious.The gambling agreement did not curb the reduction of EVA and aggravated the management’s overconfidence,leading to more aggressive mergers and acquisitions.However,there is a time limit for performance commitments,and risk compensation after the commitment period cannot be guaranteed.At the same time,once the goodwill is substantially impaired,the gambling agreement cannot compensate for all the losses of the company.In response to the occurrence of the above risks,enterprises should reasonably evaluate and improve the reward and punishment measures within and outside the commitment period during M&A.Regulators should reasonably intervene in the valuation of M&A,promptly issue risk warnings,and stop high-risk behaviors.The research focuses on the “light asset” as a typical film and television industry,which is in line with reality and enriches the theory of the limitations of the application of gambling agreements in the “light asset” industry.On the other hand,using the latest data throughout the commitment period,combined with the event research method,EVA,and theoretical research on corporate behavior,it breaks the limitations of traditional financial indicator research and enriches the relevant conclusions of the film and television industry’s gambling agreement and goodwill impairment risk research.