Research On The Motivation Financial Performance Of Shengyi Electronic’s Spin Off And Listing

With the increasing development of enterprise diversification,the management efficiency and resource waste brought by diversification have decreased,and the inability to concentrate on main business has become prominent.As a means of contractive enterprise restructuring,spin off and listing can effectively alleviate various problems brought by diversification to the enterprise.China’s attitude towards corporate spinoffs has undergone multiple changes,resulting in a relatively slow development process of domestic spinoffs and listings.It was not until the release of the 2019 "Several Provisions on Pilot Domestic Listing of Subsidiaries under Spinoffs of Listed Companies" that China’s spinoffs and listings began to flourish.It has been two years since Shengyi Technology’s spin off of Shengyi Electronics,as the first subsidiary in China to go public in the mainland sector.This article analyzes the reasons for the spin off of Shengyi Technology through pecking order financing theory,information asymmetry theory,and core strategy theory,and combines theory with case analysis and literature review to study the changes in the financial performance of Shengyi Technology and Shengyi Electronics before and after the spin off,Based on this,we can determine whether the split listing can offset the impact of diversified operations and promote the development of the company.Through the study of this case,this article found that the motives for company spin off can be divided into external and internal motives.The external factors are mainly divided into three points: firstly,the prospects of the electronic product market are promising,and the Chinese market is promising.Shengyi Electronics needs to quickly seize the market.Secondly,with the introduction of policies related to spin off listing,the difficulty of listing high-tech enterprises has decreased.Thirdly,breaking information asymmetry and unleashing the company’s development potential.The internal motivation can be divided into two points: firstly,expanding financing methods and improving debt repayment ability.Secondly,focus on the main business and optimize profitability and growth capabilities.The main conclusions drawn from the research are as follows: firstly,the spinoff of a subsidiary for listing does indeed increase the parent company’s focus on its main business and enhance its growth ability.Secondly,after streamlining the industrial structure,the main products receive more attention,which can quickly seize the market and improve the profitability of the parent company.Once again,the financing capacity of the subsidiary has improved,raising a large amount of funds from the capital market,alleviating debt pressure,and improving debt repayment ability.Finally,the subsidiary’s efficiency in utilizing funds has decreased,leaving a large amount of funds after the spin off,resulting in a decrease in operational capacity.Based on the research in this paper,the following insights are drawn.Enterprises should select suitable subsidiaries for spin off,and Shengyi Electronics,as the most excellent subsidiary,can develop rapidly with good market prospects after spin off;Spin off must be a deliberate action taken by the enterprise,consistent with the company’s development strategy;Spin off listing can be used as a means to improve financial performance;The management should adapt to the operation of the company after the spin off as soon as possible and allocate the resources raised reasonably.