Research On The Motivation And Performance Of Spin-off Of Growing Enterprise

Split listing has now become one of the commonly used contractive asset restructuring methods of enterprises,which originated in the 1980 s and is now a commonly used capital operation method.From the perspective of enterprise life cycle theory,enterprises in different stages of enterprise life cycle have different internal characteristics and the environment they face.They are also different in the formulation and implementation of their own financial behavior.According to the "Kearney Merger and Acquisition Strategy",when companies choose to split and list for asset restructuring,most of their enterprises are in the mature period and the recession period.In the mature period,enterprises choose to split mainly because they tend to split subsidiaries,businesses or assets that have little or no relationship with the core business of the enterprise,and then use more resources to concentrate on the main business.In the recession period,enterprises choose to split more often because they use the split as an exit mechanism to ensure that the enterprises can survive this period smoothly.In recent years,the successful spin-off enterprises of foreign enterprises include American Dell Technology spin-off holding company Weirui,American fashion supplier L Brands "One Split,Two Split",German merck kgaa spin-off its healthcare business Ogalon,Japanese Toshiba Company "One Split,Two Split" and American General Electric "One Split,Three" and other traditional giant enterprises.These giant enterprises are all in the period of enterprise maturity or decline.In the domestic market,in 2015,Chem-Trend split its major subsidiary Hequan Pharmaceutical to be listed on the New Third Board,and in 2016,Haidilao split its subsidiary Yihai International to be listed on the Main Board of the Hong Kong Stock Exchange.The parent company of the split listing is also in its mature stage.Based on the above background,we observe that it is feasible in theory and in practice to choose to split an enterprise during its maturity and decline periods,and then the author raises the question: can an enterprise split during its growth period? Is there any motivation to split the growth period? What is the practical effect of spin-off of growing enterprises? From the perspective of problems,the case analysis object selected in this paper is the single case of Shanghai Electric’s spin-off subsidiary,Electric Wind Power,going public in science and technology innovation board.During the period from before Shanghai Electric’s spin-off to the formal spin-off,the author judges that Shanghai Electric is in the growth stage before the spin-off from the relevant financial indicators and external macro environment.The analysis is based on the idea of "Introduction to the spin-off listing plan–Analysis of financial and non-financial drivers of the spin-off in the growth stage–Analysis of performance and non-financial performance after the spin-off of the growing enterprises",and makes an in-depth study on the motivation and economic consequences of the spin-off of Shanghai Electric in the growth stage,andIn this paper,the case study method,event study method and other research methods are used to analyze the motivation and economic consequences of the split in the growth period of Shanghai Electric.In the process of writing,firstly,the relevant literature on the motivation and performance of the split listing and the characteristics of each cycle of the enterprise life cycle are sorted out and comprehensively evaluated.Secondly,it focuses on the analysis of the relationship between corporate life cycle and spin-off listing,and gives an overview of information asymmetry theory,corporate life cycle theory and other related theories,which lays a theoretical foundation for the following case study.Once again,the parent and subsidiary are introduced,the separation process is described in detail,and the life cycle stages of the parent and subsidiary are divided by combining relevant financial indicators with the external macro environment.Finally,from the perspective of financial drivers(financing,investment and dividend distribution)and non-financial drivers(national and industry policies),financial performance(EVA value and event research method)and non-financial performance(brand awareness and technology level),the paper makes a concrete analysis of the motivation and performance of Shanghai Electric’s split and draws corresponding conclusions.The study found that the main financial reasons for the split in the growth period of Shanghai Electric are that after the split,the subsidiary company of Shanghai Electric has a better corporate governance structure and equity incentive mechanism,thus inhibiting over-investment,improving the business concentration of parent and subsidiary companies and reducing investment losses.Expanding the external financing channels of subsidiaries and relieving the capital pressure of the parent company and insufficient financing of subsidiaries.The reasonable dividend distribution policy reduces the difficulty and cost of the subsidiary’s refinancing and improves the external impression of the poor performance of the parent company to a certain extent;The non-financial reasons are mainly that the split has promoted the deepening of the mixed reform of Shanghai Electric’s state-owned enterprises.Relevant wind power supporting policies have provided a broad prospect for the rapid development of the wind power industry and promoted the company to focus on scientific and technological innovation,etc.In terms of financial performance,the split has brought a better excess return rate for the parent company,Shanghai Electric,and the short-term market response for the subsidiary is not good.Although the split and listing have not significantly improved the EVA value of the subsidiary’s operating performance,but even though the listing has not compromised the subsidiary due to the parent company’s "thunder" announcement;In terms of non-financial performance,the unbundling has improved the technological research and development and innovation capabilities of both the parent and subsidiary companies to a certain extent,while also enhancing their respective brand awareness.The main contribution of this paper is to analyze the relationship between the split listing behavior of growing enterprises and the enterprise life cycle theory from the perspective of enterprise life cycle theory and draw corresponding conclusions,which enriches and expands the enterprise life cycle theory;Breaking through the traditional theoretical inertia thinking,the case study of Shanghai Electric’s growth-stage spin-off is carried out,which supplements and expands the theory and practice of the spin-off listing of growth-stage enterprises;Through the analysis of the practical case of Shanghai Electric,this paper provides reference and guidance for the business activities of the split listing in different stages of the enterprise capital market and the state-owned enterprises and diversified enterprises that wish to choose the split listing method for asset restructuring.