Research On The Value Creation Of The Spin-off And Listing Of Shengyi Technology’s Subsidiary

Under the general trend of economic globalization,market competition has become more intense.In order to obtain profit growth and diversify business risks,many companies have tried business diversification or mergers and acquisitions,but this has also brought about negative aspects such as uneven resource allocation and increased management costs.Therefore,many companies are trying to find a solution to the above problems,and the spinoff and listing have gradually attracted the attention of the market and scholars.The wave of mergers and acquisitions in European and American countries was earlier,and the application and research of spin-offs and listings were relatively complete.However,the development of China’s market economy was relatively late,so spin-offs and listings lacked extensive applications and research in China.In December 2019,the CSRC issued the “Regulations about Pilot Domestic Listing of Subsidiaries of Listed Companies”,confirming that the spinoff is the capital market’s important means of optimizing the allocation of resources has promoted the development process of spin-off and listing in China.Therefore,this article chooses the spin-off and listing of Shengyi Electronics,a subsidiary of Shengyi Technology,as a research case to study the path and effect of its value creation,which has certain practical and theoretical significance.This paper first uses the literature research method to study and generalize the relevant research on spin-off and listing.Secondly,after introducing relevant theoretical foundations such as information asymmetry,as well as the practice and policy development of Chinese companies’ spin-off and listing,this article selects the spin-off of Shengyi Electronics,a subsidiary of Shengyi Technology,and its listing on the Science and Technology Innovation Board as a research case.The motivation and process of listing have also been sorted out.Then take the value creation of the enterprise as the core research question,and construct its value creation path analysis framework.Starting from the motivation of Shengyi Technology’s spin-off and listing,it analyzes how the case company enhances corporate value through the spin-off and listing from the perspectives of financing effects,operating effects and management effects,and studies the realization of the case company’s market value from the perspective of market effects.Then this article analyzes the value creation effect of Shengyi Technology’s spin-off and listing through the decomposition of EVA before and after its spinoff and the changes in excess return and Tobin’s Q value.Finally,it summarizes the results of the case study and provides suggestions for companies that intend to spin off and go public.Through research,the conclusions of this paper are as follows: First,after the spin-off and listing of Shengyi Technology,the EVA has increased significantly,and the enterprise value has been improved.Through the decomposition of the EVA,the main reason is that the spin-off and listing has increased the total capital as a whole.The funding gap has narrowed,and the new financing platform has significantly eased financing pressure and optimized the capital structure.At the same time,Shengyi Technology has improved its profitability by focusing on its main business,making business decisions more flexible,and enhancing its core competitiveness.The independence of parent and subsidiary makes its management incentive system more effective and external supervision more perfect,which improves the operation and management status.Secondly,after the announcement of the spin-off and listing plan and the completion of the listing,Shengyi Technology has achieved a significant positive cumulative excess return in the short term,showing optimistic market expectations.The announcements of the spin-off and listing information have sent positive noise to the capital market that its value has been underestimated,reducing the asymmetry of information,and realizing the value of the enterprise.Finally,it should also be seen that Shengyi Technology focuses on improving the profitability of its main business while putting pressure on the spinoff business and the poor operation of the pressure business.The market revised its assessment of its corporate value,and Tobin’s Q value showed a downward trend in the later stage of the spin-off.The increase in total capital is greater than the increase in revenue and market value,and its long-term value creation effect remains to be further investigated.At the end of this article,combined with research cases,some suggestions are provided for companies that intend to spin-off and go public.This article hopes to pay attention to the spin-off and go public,so as to better play the role of spin-off and go public and help companies realize value creation.It is hoped that through this article,the relevant research on China’s domestic spin-off and listing will be enriched.