Research On The Causes And Impacts Of Wanda Film's Goodwill Impairment Under Premium Mergers And Acquisition

The global economy is gradually recovering.Under a series of strong policies to encourage the development of the capital market in China,enterprises have expanded their business scale and strengthened their competitiveness through mergers and acquisitions.However,while strengthening the company’s strength through M&A activities,it also brings huge risks.How to reasonably price cultural enterprises with the special property of light assets in M&A activities is a problem that every cultural enterprise must face in M&A.Most cultural enterprises adopt the common pricing method in the market-the income method,but under the income method,too many subjective intentions often lead to excessive M&A consideration,resulting in a huge amount of goodwill assets on the back of the M&A.The merger and acquisition activities with overvalued and high premium boosted the accumulation of goodwill assets,and the risk of goodwill impairment continued to accumulate.In 2019,the cultural enterprises that carried out large-scale high-price mergers and acquisitions in the early stage had the problem of goodwill impairment,which caused great harm to the share price and operating conditions of listed companies.In this context,this thesis analyzes the causes and effects of the goodwill impairment of Wanda Film under the premium merger and acquisition through case analysis.This thesis selects Wanda Film,a typical company with goodwill impairment under premium M&A,as the research object of this case study.First of all,it elaborates and combs the relevant literature and theoretical basis of premium M&A and goodwill impairment,based on principal-agent theory,M&A motivation theory and information asymmetry theory,to provide theoretical basis for the following research.Secondly,the company introduces Wanda Film,expounds the process and purpose of Wanda Film’s premium M&A,sorts out the formation of Wanda Film’s goodwill,and analyzes the reasons for goodwill impairment from the level of listed companies and industries.Finally,it analyzes the impact of goodwill impairment under Wanda Film’s premium merger and acquisition,and analyzes the impact of goodwill impairment on the stock price through the event study method.On this basis,it discusses the impact of goodwill impairment on the financial situation of listed companies from four aspects: profitability,operating ability,solvency and growth ability.The study found that Wanda Film’s valuation and expectation of the acquisition target were unreasonable and did not have a reasonable expectation of the future development of the industry;The impairment of goodwill has caused the risk of the collapse of Wanda Film’s share price.After the company announced the provision of impairment of goodwill,investors in the market will immediately evaluate and make corresponding decisions,and sell the company’s shares in succession,resulting in a sharp decline in the company’s share price;In the analysis of the impact of goodwill impairment on the company’s financial situation,goodwill impairment reduced the profitability,operating capacity,solvency and growth capacity of Wanda Film,reflecting the negative impact on the company’s operating situation.Therefore,based on the conclusions reached,this thesis proposes that: first,the M&A enterprises should adopt reasonable valuation and reasonably expect the target enterprises;Second,reasonably anticipate the development trend of the industry and avoid the impairment of goodwill caused by external factors;Third,improve the information disclosure system and standardize the impairment of goodwill;Fourth,strengthen the integration of enterprises after mergers and acquisitions to avoid the impairment of goodwill and the loss of corporate interests.