Research On The Motivation And Performance Of The Crave-outs And Of JD Group

Against the backdrop of highly developed economic globalization and deepening capital market reforms,many large enterprises have formed many advantageous businesses in the process of diversified development.However,with the continuous growth of scale,the complex management system and internal resource competition within the group have gradually become apparent.Therefore,Equity Carve-outs has become a choice.Enterprises use Carve-outs to preserve their advantageous businesses and improve their management level.The China Securities Regulatory Commission(CSRC)issued the "Several Provisions on the Pilot Program for the Carve-outs of Subsidiaries of Listed Companies for Domestic Listing" in December 2019,and subsequently issued the "Equity Carve-outs Rules(Trial)" in January 2022 to replace the 2019 Carve-outs document.The successive introduction of the Carve-outs policy not only fills the gap in the relevant systems of the domestic capital market,but also marks a significant change in the attitude of regulatory authorities towards Equity Carve-outs,shifting from strict control to a more open attitude,allowing eligible enterprises to Carve-outs their highly independent subsidiaries for domestic listing.Since the release of the Carve-outs document in 2019,hundreds of listed companies in China have announced their plans for Equity Carve-outs.As of February 2023,there have been 21 successful cases of Carve-outs subsidiaries for domestic listing.The Carve-outs craze in the domestic market will continue in the future.As a representative of China’s internet companies,JD Group spun off JD Health and JD Logistics for listing in the Hong Kong market in December 2020 and May2021,respectively.It is rare for JD Group to achieve two separate listings of its subsidiaries in a short period of time.In March 2023,JD Group once again revealed its plan to Carve-outs JD Industrial Development and JD Industrial for listing on the Hong Kong stock market.The case of JD Group’s Equity Carve-outs has certain timeliness and typicality,and it is imperative to study the successful Equity Carve-outs of JD Group multiple times.This article takes the two breakdowns of JD Group as the research object,using case study and literature research methods.Based on previous research literature,it analyzes the motivation,process,and performance impact of the two breakdowns on JD Group.Firstly,this article introduces the research background and significance,sorts out relevant literature,and summarizes the theoretical research achievements of domestic and foreign scholars in the definition,motivation,and performance of Equity Carve-outs.Secondly,an introduction is given to the relevant situation and the process of the Equity Carve-outs of the case company JD Group and its two subsidiaries,and an analysis is conducted on the reasons for the two Equity Carve-outs.It is found that the main motivation for JD Group’s split of JD Health lies in improving the incentive effect on management and meeting the needs of professional business strategies.In the JD Logistics Carve-outs event,the financing motivation is more obvious,and there is also a need to ensure the long-term development of JD Logistics Better implementation of management incentives and incentives to mitigate information asymmetry.Subsequently,the analysis will be conducted from the perspectives of market effects and financial performance.Research has found that both Carve-outs events have brought positive short-term market effects to JD Group,while the trend of long-term market effects indicates that the two Equity Carve-outs have ultimately caused negative wealth effects to JD Group shareholders.From the perspective of financial performance,after the two Equity Carve-outs,JD Group’s debt paying ability has significantly improved,liquidity risk has decreased,and financing effectiveness is significant;The profitability and growth ability have decreased,the net profit performance is unstable,the proportion of core business has decreased,and the speed of performance growth has slowed down.According to the comprehensive financial performance score of JD Group,when splitting up JD Health,JD Group’s comprehensive score and profitability reached their highest level in nine years;When splitting up JD Logistics,all scores decreased but remained above the average.Finally,this article summarizes and summarizes the research related to the two Equity Carve-outs of JD Group,and concludes that opening up financing channels and implementing long-term strategies are the main driving forces;The degree of market effect is influenced by the independence of subsidiaries;The Equity Carve-outs has slowed down the growth rate of the parent company’s financial performance.In addition,three inspirations can be summarized: layout enterprise Carve-outs,seize the opportunity to go public;Improve business structure and enhance the core competitiveness of parent and subsidiary companies;The separation of enterprises should be in line with the strategic layout of the group.Provide reference experience for other companies that want to go public through Carve-outs,and also provide reference significance for JD Group’s subsequent Carve-outs plan.