Research On The Motivation And Performance Of The Spin-off Of Chengchang Technology By HeT

With the accelerated process of economic globalization,many companies choose the expansion strategy of diversification in order to improve their competitiveness in the market and reduce operational risks,however,excessive expansion may bring problems such as low operational efficiency and effectiveness.In January 2022,China Securities Regulatory Commission(CSRC)issued new regulations on "Rules for Spin-off of Listed Companies(for Trial Implementation)" to further clarify the conditions and regulatory requirements for spin-offs,and in the same year,the report of the 20 th Party Congress also proposed to improve the function of capital market and increase the proportion of direct financing,A-share spin-offs have continued to heat up,especially by IC,new Materials and pharmaceuticals and biology and other emerging hot industries.This paper discusses the motivation for the spin-off of Chengchang Technology based on the case of the spin-off and the impact of this event on the performance of the parent and subsidiary.First,we review the domestic and international literature on the meaning,motivation,and performance of spin-offs;second,we introduce theories of financing,information asymmetry,and core strategy related to spin-offs;on the basis of theoretical studies,we sort out the important time points in the spin-off process and explore the intrinsic motivation of the spin-off;third,we analyze the capital market,financial,and non-financial performance of parent and subsidiary companies In addition,we also analyze the capital market,financial and non-financial performance of the parent and subsidiary,and attempt to investigate the link between the spin-off behavior and economic consequences in a comprehensive manner.This paper hopes that the case study will provide some reference value for other companies that want to spin off.The following conclusions are drawn from the analysis: First,the spin-off has a positive impact on the capital market performance of both the parent and the subsidiary,and the cumulative excess return of the spin-off is significantly greater than zero,and investors are more optimistic about this event.Second,the spin-off has not significantly improved the financial performance of the parent company,HeT,mainly due to the tight supply of upstream raw materials,global transportation disruptions,and the short time to complete the spin-off;third,the spin-off has improved the financial performance of the subsidiary Chengchang Technology,mainly due to its wider financing channels,increased investment in research and development,and increasingly rich product matrix after the IPO;fourth,the spin-off helps improve the non-financial performance of the parent and subsidiary.financial performance,such as increasing market share,reducing information asymmetry,enhancing R&D capability,and improving revenue structure.Finally,this paper makes the following suggestions for companies that intend to go public with a spin-off: maintain policy sensitivity and seize development opportunities;improve revenue structure and strengthen information disclosure;use capital wisely to increase market share;and focus on long-term operations to improve spin-off performance.