Analysis On The Impairment Of Goodwill In ST Shuzhi’s Merger And Acquisition Of BBHI

In recent years,my country’s capital market reform and industrial structure adjustment have achieved remarkable results.Under this influence,mergers and acquisitions between enterprises have become more frequent.In order to quickly realize their own development strategies,many companies do not hesitate to pay a high price to acquire other companies,and these high-premium mergers and acquisitions have also brought an amazing scale of goodwill to the market.Compared with other assets of the enterprise,goodwill is special,it is unrecognizable,and has a lot of subjectivity.These characteristics increase the difficulty of goodwill measurement.Once the judgment of goodwill is inaccurate,there will be a huge risk of goodwill impairment,affecting the normal operation of the enterprise,and even disturbing the normal order of the capital market.In the past few years,the market has experienced many waves of goodwill impairment in mergers and acquisitions,which has caused heavy losses to investors and frustrated their enthusiasm.The problem of goodwill impairment has become a hot issue that the capital market has to pay attention to.In this context,it is of great theoretical and practical significance to study the reasons and economic consequences of corporate goodwill impairment.This thesis takes ST Shuzhi’s merger and acquisition of BBHI goodwill impairment as the case study object,using the case study method as the main method,supplemented by the literature study method,event study method and comparative analysis method,and studies the goodwill impairment of mergers and acquisitions on a sufficient theoretical basis.Causes and economic consequences.This thesis first introduces the research background and significance of M&A goodwill impairment,reviews the literature related to M&A goodwill recognition and subsequent measurement,factors affecting M&A goodwill impairment,and the economic consequences of M&A goodwill impairment,clarifying the research ideas and Research methods,established research framework.Secondly,it studies the concepts and theories related to the impairment of goodwill in mergers and acquisitions,which lays a solid foundation for the study.Once again,it analyzes the motivation,process and goodwill impairment of ST Shuzhi’s acquisition of BBHI,and deeply analyzes the reasons and economic consequences of this goodwill impairment event.Regarding the reasons for the formation of goodwill impairment,this thesis finds that ST Shuzhi’s acquisition of BBHI at a high premium has formed a “goodwill bubble”,ST Shuzhi’s lack of consideration of future integration risks has resulted in poor integration operations,and BBHI’s performance plummeted after the performance commitment period.Factors such as the possible earnings management motivation of ST Shuzhi’s management team led to a significant impairment of ST Shuzhi’s goodwill in 2020.Regarding the economic consequences of the impairment of goodwill in mergers and acquisitions,this thesis mainly analyzes the financial performance,non-financial performance and market performance of ST Shuzhi.ST Shuzhi’s stock price has also been greatly affected.Finally,the full text is summarized and targeted suggestions are given.The main results of this thesis are as follows: First,high premium mergers and acquisitions will lead companies to confirm high goodwill,thereby increasing the subsequent impairment risk of goodwill.Second,the poor performance of the acquired company will directly lead to the impairment of the goodwill of the acquisition,and the management is likely to actively choose the amount and time to accrue the impairment of goodwill for the sake of maximizing its own interests.Important reasons for impairment of reputation.Third,the impairment of goodwill will have a serious negative impact on the company,reducing the company’s financial performance,non-financial performance and market performance.In response to the problems in the case,this thesis considers many aspects and draws targeted enlightenment: First,the acquirer should rationally evaluate the assets of the acquiree during the acquisition,and be alert to the high performance commitment of the acquiree.Second,the acquirer should strictly formulate a feasible integration plan to effectively improve the postmerger integration effect.Third,the acquirer should continuously improve the company’s internal control system and reduce the space for executives’ earnings management.Fourth,regulators should optimize the subsequent measurement methods of goodwill,try to introduce the amortization method in combination with the impairment test method,and strengthen the disclosure requirements for goodwill information.Fifth,small and medium investors should strengthen the study of financial professional knowledge,improve their ability to distinguish,and minimize the loss caused by the impairment of goodwill.