Research On The Effect Of Kingsoft Office's Equity Crave-outs

When the market is approaching maturity,the upgrading of business and technology is the way for enterprises to remain invincible.This requires huge resource investment,and the parent company operating multiple businesses may be unable to bear the development funds required by its subsidiaries.Therefore,as a capital operation mode to shrink the business scale,equity crave-outs is more and more used.However,under the strict control of the policy,few enterprises attempted to carry out equity crave-outs successfully in China until 2019.The CSRC not only allowed listed companies to spin off their subsidiaries to the SSE STAR Market,but also relaxed the profit threshold,capital use requirements and other restrictions.More and more companies take advantage of the policy to accelerate the plan of equity crave-outs.However,behind the enthusiasm of the market,whether equity crave-outs can accelerate the development of corporations needs further research.This paper selects Kingsoft Office as the research object,which is an exploration of the equity crave-outs of new information technology service companies.With the development of domestic information technology innovation industry,it is expected that more companies in the same industry will have the demand for equity crave-outs.Therefore,the research conclusions and suggestions of this paper can be used for reference.Firstly,this paper sorts out the research results related to equity crave-outs,and builds the framework for case analysis.Secondly,using SWOT analytic method,this paper excavates the reasons that case companies finally chose the equity crave-outs under the guidance of strategic objectives.Thirdly,on the one hand,this paper uses the event research method to analyze the capital market response after the crave-outs and listing,on the other hand,it explores the impact on the company's economic activities and governance activities from the four aspects of financing,investment,operation and governance,and then analyzes the changes of the financial and non-financial performance of Kingsoft Office under the influence of the above-mentioned company activities,Explore whether it has achieved the expected goal of equity crave-outs.Finally,this paper draws the research conclusion and give related suggestions for other companies willing to spin off and list.This paper draws conclusions as follows: as for Kingsoft Office,the spin off and listing first provides it with new financing channels,further strengthens its solvency,makes it have the capital to build a high-quality team working on updating technology and focus on R ? D activities in the new field of office software;Secondly,the listing of Kingsoft Office not only enlarges the role of equity incentive for core developers,speeds up the output speed of innovation achievements,but also strengthens external supervision and optimizes operation indicators to a certain extent;Thirdly,while continuously optimizing products and services,Kingsoft Office has significantly increased the number of active users and paying users,pressing the acceleration key for the growth of revenue and profit.The strengthening of cost control has become the guarantee for the company's profitability to expand its leading edge;Finally,within one year after the spin-off and listing,the economic added value of Kingsoft Office increased fourfold.However,after the explosive growth stage of users,the growth rate of net profit of Kingsoft Office was not equal to the invested capital due to the decline of the growth rate of users,and the economic added value failed to achieve continuous growth.For the parent company Kingsoft,the influence of equity crave-outs on performance is mainly reflected in the short-term excess return of its share price and the growth of market value.Although the revenue generated by the office software business continues to grow,the overall performance of the company has not improved significantly due to the continuous decline in the number of users of the game business.Based on analysis above,this paper puts forward the following suggestions for the companies willing to split:(1)the parent company needs to carefully select the split object;(2)Subsidiaries should timely adjust the listing plan and select appropriate sectors to effectively improve the listing success rate;(3)Equity crave-outs only provides an opportunity for parent and subsidiary companies to focus on their respective businesses.Whether corporations' core business strength can be enhanced depends on their degree of expertise in operation.