A Study On The Causes And Economic Consequences Of Goodwill Impairment In Liou Group’s Acquisition Of Zhiqu Advertising

In recent years,due to the continuous improvement of China’s economic structure,mergers and acquisitions have become the norm in today’s society.The implementation of mergers and acquisitions can greatly expand the business scope of enterprises and enhance their competitiveness,enabling them to better adapt to the ever-changing market environment.However,it should also be noted that acquisition activities may lead to an excessively high level of goodwill for the company,thereby increasing the company’s risk and having a negative impact on its long-term health and sustainability.In fact,goodwill is a double-edged sword.If the merger and acquisition achieves the expected goals and achieves synergies,it can bring higher profits to the enterprise.However,if the merger and acquisition enterprise fails to fulfill its performance commitments,there is a risk of goodwill impairment for the acquiring party,which affects the company’s net profit.At present,most enterprises face many problems in the impairment of goodwill,such as inaccurate grasp of the overall development trend of their industry,inadequate understanding and analysis of the target company’s financial situation,internal governance structure,failure to select appropriate evaluation methods,and unreasonable performance development,which may lead to the problem of goodwill impairment in enterprises.These problems may cause a devastating blow to the subsequent continuous operation of the enterprise.Therefore,the issue of goodwill impairment has become one of the urgent issues to be addressed in the capital market.Starting from the causes of goodwill impairment,analyzing the economic impact that a company may be affected by during its business development process,and combining relevant theoretical experience to explore how enterprises can prevent the risk of goodwill impairment and avoid the resulting economic impact during their business development process is a crucial issue.This article aims to explore in depth the issue of goodwill impairment of listed companies after cross industry mergers and acquisitions in recent years through the case of the acquisition of Zhiqu Advertising by Liou Shares.To this end,we adopted literature research method and combined empirical research to systematically sort out and explain the concept and theory of goodwill impairment.Then,after understanding the process and results of M&A,we analyzed the reasons for goodwill impairment of Leo Share’s M&A of Zhiqu Advertising from multiple perspectives of external and internal reasons.At the same time,we combined the event study method to analyze the economic consequences of goodwill impairment on enterprises from multiple dimensions such as short-term market and financial performance and enterprise value.Finally,from both internal and external perspectives,suggestions are proposed to regulate the impairment of goodwill,which has certain practical significance.An in-depth analysis of the fundamental reasons for the significant impairment of goodwill in this merger and acquisition case provides some experience for other listed companies to avoid such issues when conducting cross industry mergers and acquisitions.