| In recent years,software and information technology service industry has become one of the hot M&A industries in the capital market.Many listed companies in traditional industries have spared no expense to acquire companies in this industry at a high premium,so as to seek to change their main business and successfully enter such emerging industries.However,after the merger boom,the hidden danger of high goodwill caused by high premium mergers and acquisitions has gradually emerged,and there are more and more high goodwill impairment events and the scale of impairment has become larger and larger.Frequent huge goodwill impairment has led to frequent changes in corporate performance.According to Dongfang.com,the total goodwill of A-share listed companies at the end of 2018 was 1.31 trillion yuan,and 885 of them had set aside up to 166.764 billion yuan of goodwill impairment losses.Statistics show that 2018 is the year with the highest impairment scale of A-share goodwill,accounting for 12.76% of the total amount of goodwill,and the provision of high goodwill impairment leads to huge losses of many listed companies.This paper takes *ST Gaosheng as the case study object,focusing on the causes of the high goodwill of the company and the key influencing factors of goodwill impairment.Firstly,this paper analyzes the goodwill recognition and goodwill impairment of software and information technology service industry,and systematically expounds the background of the emergence of *ST Gaosheng high goodwill and goodwill impairment.This paper holds that the transformation of the acquirer,the information asymmetry,the influence of high performance commitment and valuation methods,and the consideration payment methods are all important reasons for the huge goodwill of *ST Gaosheng.The merger and acquisition party is eager to transform the merger and acquisition to save the company’s operating crisis,so they made a compromise in the merger and acquisition price negotiation,and the pressure of turnaround made *ST Gaosheng accept high premium;And because of frequently involved in cross-industry mergers and acquisitions,and *ST Gaosheng company’s original business field and the acquired party difference is large,in a short time it can not build a professional team to obtain more information of the acquired party business benefits and future development related information,information asymmetry made the merger and acquisition party at a disadvantage.Although the performance commitment reduced the negotiation cost of the two parties,it increased the consideration paid by the merger party,resulting in the situation of "expensive sell,expensive buy".In addition,there are some drawbacks in the way of asset appraisal,and the result of M&A valuation is too high,which further led to the accumulation of high goodwill of *ST Gaosheng;At the same time,under the current M&A transaction system in China,due to the influence of share liquidity restrictions and other discount factors,the consideration payment methods of stock payment in the M&A contract will pay higher cost than cash payment,which further causes the overvaluation of goodwill of *ST Gaosheng companies.Then,the paper examines the *ST Gaosheng major influence factors of goodwill impairment,the paper argues that: the performance commitment factors and economic factors,surplus management,policy anticipated changes and lack of internal control factors are the keys to * ST Gaosheng goodwill impairment,it is a combination of the above factors resulted in the case enterprise’s two consecutive years huge goodwill impairment loss.First of all,since 2018,in face of an adverse market environment and increasingly saturated software and information technology services market,*ST Gaosheng’s subsidiaries were in poor operating conditions and had not achieved the expected profit targets of the performance commitment,resulting in goodwill impairment.Second,the case company executives had the motivation of earnings management: *ST Gaosheng’s managers used the principles of elasticity to borrow A shares bear market and *ST Gaosheng negative events broke the point of large impairment of goodwill,so it can cover up the fact of poor operating perfoemance;In 2019,in order to keep its status as a listed company,*ST Gaosheng provised huge goodwill impairment again,trying to release the risk in advance through a large proportion of goodwill impairment provision,gaving the third year profit turnaround to create more space;At the same time,since 2018,the frequent changes of senior executives in *ST Gaosheng had also provided opportunities for the management to manipulate profits by using goodwill impairment.The succeeding senior executives blamed the huge losses on the original management through the provision of goodwill impairment,which is conducive to the realization of their performance assessment goals in the future period.In addition,in the face of expected changes in goodwill accounting policies,the case company *ST Gaosheng was eager to release the financial pressure of goodwill amortization at the later stage,and reduced the carrying value of goodwill through the provision of high goodwill impairment in advance,resulting in a sharp decline in the scale of *ST Gaosheng goodwill.Finally,*ST Gaosheng lacked the effective internal control mechanism construction,it cannot avoid the acquisition of unreasonable valuation and unreasonable testing process of goodwill impairment,at the same time,a weak control environment also gave *ST Gaosheng executives the rights of the above internal control management by manipulating the amount of goodwill and impairment point to mislead investors capital markets and achieve benefit.The foregoing factors lead *ST Gaosheng large proportion of goodwill impairment in 2018 and 2019.In this paper,the event study method is used to further investigate the market reaction of *ST Gaosheng huge goodwill impairment event.The research found that before *ST Gaosheng’s 2018 and 2019 performance announcement of goodwill impairment loss,its excess return rate had a relatively large fluctuation,and the cumulative excess return rate also showed a significant downward trend.Compared with the huge goodwill impairment announcement date for the first time,market reaction of the second huge goodwill impairment is relatively smooth,the reason may be that,for the first time,goodwill is bigger,directly causing *ST Gaosheng huge losses.*ST Gaosheng’s huge goodwill impairment is harder to anticipate for investors,so the market response was more fierce;While in 2019,*ST Gaosheng operating conditions did not significantly improve,and the company still has a lot of negative news exposure,although the second goodwill impairment scale was still large,but compared with the first goodwill impairment,2019 huge goodwill impairment apparently had been expected by investors.The market had already had the basic expectation of *ST Gaosheng goodwill impairment in 2019,so the market reaction caused by the second goodwill impairment is relatively mild.The market performance before and after the two huge goodwill impairments of ST Gaosheng provides further evidence for the analysis of the key influencing factors of the aforementioned goodwill impairments. |
PDF Full Text Request