Analysis On Value Creation Of SY Company Property’s Spin-off

With the rapid development of the global economy,spin-offs have become a common way of asset restructuring in foreign capital markets,and their theoretical framework has also matured.Although the development of divestment of companies in China started late,in recent years,with the expansion of business scale of Chinese enterprises,the problem of bloated organisational framework of companies due to diversified operation methods has become increasingly prominent.To address these problems,China’s government departments have improved the relevant regulations to promote the flourishing development of spin-off listed companies and have achieved certain successful experiences.in December 2019,China launched a series of policies relating to domestic and foreign spin-off listings of A shares,including the Measures for the Continuing Supervision of Listed Companies on the Science and Technology Innovation Board(for Trial Implementation)and Certain Provisions on Pilot Domestic Listing of Subsidiaries Belonging to Listed Companies,which provide domestic listed companies to provide a more favourable development environment and more financing opportunities for listed companies.Through literature research and case studies,this paper combines domestic and international spin-off theories and the current situation of company analysis issuance in China.Taking the spin-off of Company D by Company SY as an example,this paper deeply explores the motives of spin-off,the mechanism of value creation of spin-off,capital market performance and financial benefits,and focuses on the mechanism of impact of spin-off on the value of the company and its benefits of realisation.Firstly,we examine the literature to identify the three main corporate value creation effects of a spin-off: the corporate governance effect,the capital raising effect and the corporate operating effect.Secondly,we analyse the industrial background of the case company and its own situation,sort out the major events of the spin-off and the compliance of the case company with the spin-off in chronological order,and analyse the driving reasons for the case company to choose the spin-off from the perspective of internal and external factors.Finally,the pathways and effects of value creation after the spin-off of the case company are analysed from the perspective of three major value creation effects.By verifying the value of the spin-off,conclusions can be drawn and recommendations made.Through the analysis of the case companies,this paper draws the following conclusions:(1)there are various factors driving SY’s choice of spin-off,with the most important drivers coming from the financing drive and the external competitive environment;(2)the governance capability,capital raising capability and corporate operation capability of the parent and subsidiary have been improved to a certain extent after the spin-off.The specific manifestations include: a better internal governance structure of Company D,which diversifies the shareholding structure and reduces operational risks;the increase in financing channels and the expansion of financing scale bring more development funds for the company’s operation;however,affected by the macro-economic and industry development downturn,the operating performance of the parent and subsidiary companies has not been significantly improved;(3)after the spin-off,in the short term,the industry of the parent company SY reflects significantly and the company’s interest has improved significantly,which indicates that the parent company has successfully achieved market value creation.However,the stock market reflection of subsidiary D was not as satisfactory and a decline in corporate interest occurred,indicating that the spin-off did not necessarily have a positive impact on the growth of the company.