A Study On Goodwill Impairment And Economic Consequences Of Mixed M&A

In 2014,the scale of mergers and acquisitions in China’s capital market expanded rapidly,and many listed companies began to carry out strategic transformation through mergers and acquisitions.During this period,many traditional manufacturing enterprises took advantage of the policy dividend to enter the asset-light field and realized cross-border mergers and acquisitions.Especially in the film and television media,information technology,education and medicine industries.The phenomenon of mergers and acquisitions has shown a blowout growth,and the resulting goodwill and goodwill impairment losses have also occurred frequently.In 2018-2019,the goodwill balance of listed companies in China has been maintained at more than trillion yuan,and the large amount of goodwill impairment withdrawn by enterprises has led to a serious decline in corporate performance,which has caused many concerns.In this context,this paper analyzes the goodwill problem caused by the mixed merger and acquisition of Hengqi Education and Zhongda Yingcai by Kaiyuan through case study.First of all,this paper analyzes the motivation of the mixed merger and acquisition of Kaiyuan shares,and clarifies the formation of goodwill of Kaiyuan shares in the process of merger and acquisition;Secondly,it explains the realization of the target company’s performance commitment during the integration period of the merger and acquisition of Kaiyuan shares,and explores the reasons for the impairment of the goodwill of Kaiyuan shares;Finally,it studies the economic consequences of the impairment of Kaiyuan’s goodwill,analyzes the impact on its long-term performance through financial indicators,and uses the event study method to empirically analyze whether the withdrawal of large amount of goodwill impairment of Kaiyuan in 2019 has a negative impact on corporate stock prices.The study found that Kaiyuan shares brought certain economic benefits to the company at the initial stage of the implementation of the hybrid merger,but the huge goodwill formed after the completion of the merger also brought unstable factors.The selection of valuation methods before merger and acquisition and the overly optimistic expectations of the management led to the false high goodwill of Kaiyuan shares;After the merger and acquisition,the synergy effect is not obvious,the operating performance of Kaiyuan shares is poor,and the impairment of goodwill has caused fluctuations in the company’s share price.The CAR value continues to decline and there is no sign of recovery for the time being.The T-test on the CAR value shows that the CAR is significantly different at the level of 1%,indicating that the act of withdrawing goodwill impairment of Kaiyuan shares has an impact on the share price.Finally,this paper draws conclusions from the perspective of the acquirer and puts forward suggestions to prevent the risk of goodwill impairment:(1)improve the decision-making ability of the management and carefully select the M&A industry;(2)Objectively judge the development ability of the merged company and reasonably evaluate the enterprise value;(3)Do a good job of integration and optimize resource allocation after merger and acquisition;(4)The impairment of goodwill shall be accrued in time and the impairment ratio shall be reasonably set.