Research On The Causes And Economic Consequences Of Goodwill Impairment Of Kangni Electromechanical Premium M&A Of Longxin Technology

With the continuous growth and development of my country’s economy,my country’s traditional industries continue to seek transformation and upgrading,and actively strive for the integration of resources in emerging industries.2013 to 2015 is a period of rapid growth in my country’s mergers and acquisitions.After 2018,with the expiration of the performance commitments of most target companies,companies with huge goodwill impairments emerged one after another,especially in 2018 and 2019,which became the years of concentrated performance,with goodwill impairments as high as 144.306 billion yuan and 126.529 billion yuan.On the one hand,the high amount of goodwill impairment leads to the deterioration of the business performance of the acquirer,and on the other hand,it causes the stock price to plummet,and it is difficult to protect the interests of investors.Therefore,it is of great practical significance to explore the reasons for the impairment of goodwill caused by premium mergers and acquisitions and the economic consequences.This paper takes Kangny Electromechanical as the research object,adopts the case study method,starts from the incident of Konny Electromechanical’s acquisition of Longxin Technology,and explores its merger motivation,goodwill impairment reasons and economic consequences.The study found that Konny’s acquisition of Longxin Technology was mainly driven by three factors: macro policy orientation,company business expansion and product process technology upgrade.The reasons for the impairment of goodwill,on the one hand,are affected by external factors such as the intensification of Sino-US trade friction and the possible changes in the method of goodwill impairment in the accounting standards,and on the other hand,internal factors such as Longxin Technology’s financial fraud and the company’s internal control failure.influence of factors.At the same time,the economic consequences of goodwill impairment are comprehensively analyzed from the two dimensions of short-term market reaction and long-term financial performance.Through the event study method,it was found that the capital market had a negative reaction to the goodwill impairment of the acquisition of Kangny Electromechanical,and the stock price plummeted.And judge the long-term impact of goodwill impairment from the downward trend of three financial indicators of profitability,solvency and development ability.Finally,this paper provides feasible suggestions for judging the quality of goodwill and avoiding the risk of goodwill impairment from the perspectives of government supervision,internal corporate governance and external investors.Regulatory authorities should more strictly supervise the quality of mergers and acquisitions,further strengthen the supervision of management during and after the event,require third-party evaluation agencies to perform their due responsibilities and build a multi-disciplinary network under the registration system;listed companies should choose carefully before mergers and acquisitions M&A targets and focus on integration after the completion of the M&A,in order to achieve good synergies;investors should judge whether the valuation is reasonable,judge whether synergies can be formed,and be alert to related transactions in mergers and acquisitions.