Research On The Effectiveness Of The Supervision Of Inquiry Letter In Gambling Mergers And Acquisitions

The performance of gambling type M&A is frequently broken.Under the guidance of "information disclosure as the center",the issuance of inquiry letters has become an important mechanism for monitoring M&A risks.In order to highlight its front-line regulatory functions,the exchange frequently issues inquiry letters.Can the inquiry letters play their regulatory role? Whether and how to play a regulatory role in the M&A with poor performance is a very important issue for regulators and stakeholders.Therefore,this paper mainly studies the effectiveness of inquiry letter supervision in gambling mergers and acquisitions through case studies.This paper chooses the case of Dong Fang PRECISION acquisition of PRIDE as the analysis object,tracking the inquiry of the Exchange’s inquiry letter on the performance commitment "signing performance expiration".First,analyze the risks of performance commitment M&A in this case,compare the content of the inquiry letter,and evaluate the accuracy of risk identification of the inquiry letter itself;Secondly,it analyzes the reply time,reply text and reply information content of the inquiry letter,and then obtains the manipulative accrual earnings management by modifying Jones model,and compares the improvement degree of the company’s information disclosure quality vertically;Finally,we analyze the economic consequences of the inquiry letter in different types of inquiry letters through the cumulative excess return rate.The research shows that the regulatory role of the inquiry letter is also playing a role in the case of the loss of listed companies caused by the loss of performance commitment.First of all,the exchange can identify the risks in performance commitment M&A and provide risk prompts by issuing inquiry letters.Secondly,after receiving the inquiry,the listed company will increase the quantity and quality of information disclosure through the reply letter,which will further improve the quality of information disclosure and management level to reduce the level of earnings management and reduce the risk of being questioned again;Finally,the restructuring inquiry letter of performance commitment M&A will bring positive excess cumulative income and negative income when prompting goodwill impairment and sales stop loss.However,due to the inherent defects of the performance commitment M&A and inquiry letter system,the regulatory effectiveness was limited and failed to prevent the success of M&A.Therefore,the effectiveness of inquiry letter supervision was enhanced in the aspects of evaluation standard constraints,increasing the cost of losing promise,matching punishment measures for inquiry letters,and emphasizing the independence of intermediaries to reduce the phenomenon of losing promise under supervision.