Research On M & A Performance Commitment And Goodwill Impairment

The performance commitment compensation system is a pioneering initiative in capital market supervision,and its original intention is to restrain the "deception" behavior of the transferor who is in an information advantage by transforming the merger and reorganization from a one-time transaction to a continuous transaction in the next few years,improve the transparency and fairness of the merger and acquisition transaction,thereby protecting the interests of the acquirer and investors,and maintaining the stable development of the capital market.However,in practice,the phenomenon of "backfire" has emerged in an endless stream,and the M&A performance commitment has shown the characteristics of "high valuation,high premium,high commitment","accurate standard,low fulfillment",and the huge goodwill impairment problem caused by high commitment and high valuation has exposed the drawbacks of M&A performance commitment in the operation process,which runs counter to the original intention of the performance commitment system.As an important means of operation of the capital market,M&A and restructuring is a double-edged sword,high-quality mergers and acquisitions can play a synergistic effect while boosting economic development,but ignoring irrational high-premium mergers and acquisitions,the phenomenon of goodwill impairment "explosion" caused by performance commitments when they expire will cause turbulence in the capital market.This paper selects the private placement M&A events of Chinese A-share listed companies entering into performance compensation commitment agreements from2011 to 2020 as a research sample,and discusses the impact of the performance commitments of the target enterprises on the impairment of goodwill of the M&A from the perspectives of the rationality of the performance commitments of the target enterprises in advance of the merger and acquisition and the results of the commitments of the target enterprises during the commitment period,and analyzes the impact of the surplus management degree and audit quality of the merger and acquisition parties on the relationship between the performance commitments of the merger and acquisition performance commitments and the impairment of goodwill.The lag in the provision of goodwill impairment and the impact of the target party’s participation in corporate governance on the relationship between performance commitments and goodwill impairment are further explored.The results show that there is a significant positive correlation between the aggressiveness of the performance commitment of the target enterprise and the goodwill impairment of the acquirer,the degree of surplus management of the target enterprise will strengthen the positive relationship between the two,and the audit quality will inhibit the positive relationship between the aggressiveness of the performance commitment and the impairment of goodwill;the degree of completion of the performance commitment of the target enterprise during the VAM period is negatively related to the scale of the goodwill impairment of the acquirer,and the surplus management behavior and audit quality of the acquirer will inhibit the negative correlation between the completion of the performance commitment and the scale of goodwill impairment.Further research found that the recognition of goodwill impairment is lagging behind,that is,when the target enterprise sets a more aggressive performance commitment and leads to the failure of the later performance commitment,the acquirer has the motivation to postpone the provision of goodwill impairment,and the average lag is one to two periods.The target party’s participation in corporate governance will strengthen the positive relationship between the aggressiveness of the M&A performance commitment and the impairment of goodwill,and weaken the negative relationship between the degree of achievement of the performance commitment and the impairment of goodwill,that is,the target party’s act as the director and supervisor of the acquirer will help the realization of the performance commitment and reduce the risk of goodwill impairment.