Analysis On The Motivation And Economic Consequences Of Xiamen Tungsten Spin Off Subsidiary Listed On The SSE STAR Market

In recent years,the development of our capital market has strided towards standardization and maturity.Mergers and acquisitions of listed companies are becoming more frequent.Meanwhile,increasingly fierce market competition has put forward higher requirements for the resource allocation level of enterprises.Therefore,the capital operation mode of spin-off and listing has gradually come into public view from the West and been applied by more and more enterprises.As a means of shrinking assets reorganization,spinoff and listing can not only reduce the negative synergistic effect caused by the business differentiation of the parent company and subsidiaries,but also help the parent company realize the optimal allocation of resources and enable the subsidiaries to obtain a more reasonable market valuation.After the implementation of the registration system piloted in 2019,China Securities Regulatory Commission issued Provisions on the Domestic Listing Pilot Programs for Listed Companies to Spin-off Their Subsidiaries,standardizing the behavior of enterprises to spin-off their subsidiaries to list in the domestic market,thus setting off a wave of spin-off boom in the domestic capital market.The pilot registration system makes the listing threshold of enterprises lower,the financing channels wider,and the spin-off and listing provisions provide policy support for the spin-off and listing of domestic enterprises.They provide new market opportunities for enterprises to raise financing on the SSE STAR Market,the full name of which is Sci-Tech Innovation Board.It is always difficult for diversified enterprises to achieve business concentration and balanced development at the same time.Facing the spin-off boom under the new policy,some diversified enterprises expect to achieve relatively efficient asset reorganization through spin-off and listing.It is quite important for them to learn from the experience of successful spin-off and listing cases.Based on this,the research topic of this paper is the motivation and economic consequences for domestic enterprises to list their spin-off subsidiaries on the SSE STAR Market,in order to provide reference for those enterprises planning to list on the SSE STAR Market.This paper adopts scientific methods including case study method,event study method and literature study method to analyze the case of Xiamen Tungsten splitting up Xtc New Energy Materials listed on SSE STAR Market,mainly focusing on the motivation of spin-off and listing,the realization of the economic consequences after spin-off event,and whether the economic consequences are in line with the motivations of splitting up.The research results show that the spin-off and listing have a positive impact on Xiamen Tungsten Group,and the comprehensive effects including market response,investment and financing effect,operation effect and governance effect are positive,which is in line with the expected motivations of spin-off and listing.According to the research conclusion,this paper puts forward three suggestions for other companies which are considering spin-off and listing.First,when the diversified parent company has unreasonable resource allocation and unclear development order of main business,it can consider spin-off and listing its sub-business,so as to help the subsidiary improve the efficiency of capital use and enhance its core competitiveness.Second,investors need to be more cautious in the screening of listed companies and should consider whether to invest in spin-off and listed companies from a multi-dimensional perspective.Third,spinoff and listing may become a cover for illegal activities such as profit transfer within enterprise groups.Regulators should intensify their efforts to crack down the illegal activities happened in the process of spin-off and listing,improve the relevant legal system,and guide enterprises to use spin-off and listing methods scientifically and reasonably.