Research On Goodwill Impairment Under The Precise Achievement Of Performance Commitment

Against the backdrop of the transformation of old and new drivers of growth,emerging industries such as the Internet and big data are in the ascendant.Listed companies in many traditional industries hope to open up the situation through cross-border mergers and acquisitions and realize corporate transformation.In order to reduce information asymmetry in M&A activities and transmit positive business signals to the outside world,many listed companies choose to improve the efficiency of M&A through performance commitment.However,the excessive performance commitment causes the listed company to be blindly optimistic about the future development of the target company,and eventually forms high goodwill in the statement.At the same time,some listed companies also have some problems in the commitment period,such as delaying the impairment test by taking advantage of accurate performance commitment to reach the standard,and large shareholders selling stocks at high positions by taking advantage of inside information for arbitrage.In view of this,this paper selects the typical case of Pubang’s acquisition of BRSS to explore the problem of goodwill impairment after accurate achievement of performance commitment.First of all,this paper,supported by information asymmetry theory,signal transmission theory and synergistic effect theory,combined with relevant domestic and foreign literature,expounds and analyzes the background and motivation of Pubang’s acquisition of BRSS.Secondly,this paper introduces the initial recognition and subsequent impairment of goodwill of Pubang stock acquisition through sorting out the key time points in the process of merger and acquisition.Found in the carding process,the listed company not only during the commitment period on the grounds that the results accuracy standard delay the goodwill impairment test,at the same time commitment period after the target company is a significant change in the industry environment is not in a timely manner when the goodwill impairment test,and in the disclosed goodwill information when it is optional for goodwill asset group component changes.Further,this paper makes a comparative analysis of the financial data of listed companies before and after the merger,and finds the reasons for the concentrated impairment of goodwill in combination with the letters of concern and warning issued by relevant regulatory authorities as follows: The first is that performance changes cannot support inflated goodwill;the second is that the major shareholders’ purpose of arbitrage to reduce their holdings urges enterprises to use the space of standards to postpone goodwill impairment;the third is that listed companies take advantage of goodwill impairment to conduct financial "big bath" motivation.Thirdly,this paper uses the event study method and financial index analysis to analyze the consequences caused by goodwill impairment,and finds that the concentrated impairment of goodwill causes the stock price of listed companies to fall sharply,which damages the interests of small and medium investors,and also worsens the financial index of enterprises,exposing all kinds of problems.Finally,this paper draws the following conclusions based on the problems of the case: First,the information difference in the process of M&A makes the acquireee more inclined to make high performance commitment,but the accompanying high goodwill is more likely to cause impairment risk;Second,the completion of the performance commitment cannot be equated with the absence of impairment of goodwill,because the performance commitment is the result of the past while the impairment of goodwill is an estimate of the future.Third,the flexibility of accounting standards leaves room for management to use goodwill for earnings management;Fourthly,the impairment of goodwill not only causes the financial deterioration of enterprises,but also makes small and medium investors suffer losses.Based on the above conclusions,this paper puts forward targeted suggestions,including optimizing the m&a valuation system and introducing valuation "red lines";Strengthen the supervision of performance commitment and encourage diversified forms of performance commitment;Standardize the goodwill impairment process,reduce the randomness of goodwill impairment.