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Study On The Influence Of M&A Goodwill On Stock Price Crash Risk

Posted on:2024-06-30Degree:MasterType:Thesis
Country:ChinaCandidate:T Q HouFull Text:PDF
GTID:2569306920496714Subject:Business management
Abstract/Summary:PDF Full Text Request
Goodwill,as a special asset of an enterprise that is not easily identifiable,arises from the premium paid at the time of M&A is closely related to the operating performance and market value of the enterprise.However,while M&A activities can optimise the allocation of resources among enterprises and enhance competitiveness,they can also expose M&A parties to significant goodwill impairment risks,impacting the stable operation and healthy development of China’s capital market.Since 2014,China’s listed companies have gradually relaxed their M&A requirements,and large-scale M&A restructuring has begun in industries such as computers,pharmaceuticals and biology and media.With the rise of the M&A wave,goodwill thunderstorms in listed companies have occurred frequently,and high goodwill is prone to trigger huge goodwill impairment risks,leading to a significant decline in net profit,a plunge in share price or even a collapse of the enterprise,causing widespread concern among regulators,theoretical circles and practical circles.Generally speaking,most of the existing studies have focused on the existence of goodwill impairment and the impact of the size of goodwill impairment on the risk of share price collapse,while less research has been conducted on the relationship between M&A goodwill itself and share price collapse risk and its transmission path.Given this,and against the backdrop of the increasing total size of M&A goodwill,the main question explored in this thesis is: does M&A goodwill per se affect a firm’s share price crash risk? What role do financing constraints play in the relationship between the two? Does the risk of share price collapse affected by M&A goodwill vary across different internal governance mechanisms and external monitoring contexts?This thesis empirically investigates the impact of M&A goodwill on share price collapse risk from the perspective of corporate finance,using a sample of 2,805 Shanghai and Shenzhen A-share listed companies from 2007 to 2021,and uses financing constraints as a mediating variable to analyse the mechanism by which M&A goodwill triggers share price collapse risk.The study further investigates whether there is any difference in the impact of M&A goodwill on the risk of share price collapse by considering different corporate governance mechanisms and external monitoring scenarios,based on the quality of internal control,the level of managerial shareholding,the level of institutional investor shareholding and analyst attention.The results of the study show that:(1)M&A goodwill is significantly and positively related to share price crash risk,i.e.the higher the M&A goodwill,the higher the firm’s future share price crash risk;(2)there is a significant positive relationship between M&A goodwill and financing constraints,and financing constraints play a partial mediating effect in the impact of M&A goodwill on share price crash risk;(3)the quality of internal control,management shareholding level,institutional investors’ shareholding level and analysts’ attention also affect the relationship between M&A goodwill and share price crash risk,with the positive effect of M&A goodwill on share price crash risk being more significant in the sample group with lower internal control quality,lower management shareholding,higher institutional investors’ shareholding level and higher analysts’ attention.Therefore,improving the quality of internal control and management shareholding,and reducing the level of institutional investors’ shareholding and analysts’ attention are conducive to mitigating the positive effect of M&A goodwill on firms’ share price collapse risk.In summary,this thesis enriches the study of M&A goodwill triggering share price crash risk,verifies the mediating role of financing constraints between M&A goodwill and share price crash risk,and explores its transmission mechanism;on this basis,the variables of internal control quality,management shareholding level,institutional investor shareholding level and analyst attention are added to explore their effects on the relationship between M&A goodwill and share price crash risk.To provide new ideas for finding mechanisms and methods to mitigate the risk of share price collapse.
Keywords/Search Tags:M&A goodwill, the risk of a share price crash, financing constraints
PDF Full Text Request
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