Research On The Motivations And Economic Consequences Of Corporate Spin-off

Spin-off listing of a listed company means that the listed parent company separates part of its business or a subsidiary and separately publicly lists it in the local or overseas capital market.Chinas A-share spin-off and listing system is relatively blank,and there are not many practical cases compared with foreign countries,and theoretical research is relatively lagging behind.On January 7,2022,the China Securities Regulatory Commission(CSRC)announced the "Rules for The Spin-off of Listed Companies(Trial)",which injected new vitality into the restructuring model of spin-off and listing from a policy point of view,and the enthusiasm of listed companies for A-share spinoffs and listings was high,coupled with the fact that spin-offs and listings have increasingly become an important way for Listed Companies in China to broaden financing channels and achieve equity premiums,so the research on spin-offs and listings is imminent.Since Chinas spin-off system was not perfect in the early days,there were fewer cases of meetings,so the research on spin-offs and listings mainly focused on the spin-off of subsidiaries to overseas listing,and less on spin-offs to the domestic capital market.This thesis takes Fosun Internationals spin-off of Hainan Mining as a case study,which is the first case of a Hong Kong-listed listed company listed on the Shanghai Stock Exchange through a spin-off subsidiary,which can fill the relevant gaps and provide reference significance for companies that intend to be listed in A-share spin-offs.In the past,the subjects of case studies have focused on the pharmaceutical industry,the Internet industry and the real estate sector,but this thesis is a new exploration of a mining companys spin-off and listing,expanding the types of companies that are spin-off and listed.Most of the practical cases focus on the spin-off of high-growth,high-profitability and high-core competitiveness of listed companies,which provides empirical evidence for the positive impact of spin-offs and listings,while the case study in this thesis finds that the value of enterprises has declined in the long run,enriching the diversity of cases.Based on the theory of information asymmetry,market value management theory,market timing theory and financing demand hypothesis,this thesis discusses the three driving factors of Hainan Minings spin-off and listing,and studies the short-term and long-term market performance of parent and subsidiary companies and other companies in the group after the spin-off and listing,uses financial indicator data to study the financial performance of Hainan Mining after listing,and verifies the proposed motivations while analyzing the economic consequences of spin-off listing,forming a relatively complete chain.First of all,Hainan Mining is in a leading position in the industry and has stronger profitability compared to its parent company Fosun International.The P/E ratio of the subsidiary before the spin-off and the industry in which it operates is much higher than that of the parent company,so the spin-off listing may be motivated by market capitalization management.In addition,the Shanghai Composite Index continues to strengthen,the increase is much higher than the Hang Seng Index,the parent company may expect the future industry downturn to adversely affect the performance of subsidiaries,so the spin-off listing may be due to market maneuvering.Secondly,it can be seen from the large proportion of cash dividends of Hainan Mining for several consecutive years and the increase in investment activities year by year that Hainan Mining has a financing need to expand production capacity.By tracing the follow-up destination of the raised investment funds,the motivation for financing demand is further confirmed.Third,from the short-term market performance after the spin-off and listing of Hainan Mining,the stock price of the parent and subsidiary companies has increased significantly,and the market value of the subsidiaries has increased by multiples,and the approval of the IPO application has brought a significantly positive cumulative excess yield to the shareholders of other listed companies in the group through this event,which confirms the market value management motivation of Hainan Minings spin-off and listing.Finally,from the perspective of long-term market performance,the cumulative excess yield since the spin-off listing is analyzed,and it is found that due to the decline in performance,the subsidiary has not been sought after by the capital market,and the value of the enterprise has declined,which confirms the mobile factors in the market of spin-off listing.Hainan Minings financial performance after listing was not good,and its net profit was negative for two consecutive years,and it achieved the purpose of turning losses into profits by managing the surplus of investment income.This thesis suggests that small and medium-sized investors should rationally view the spin-off and listing,and the market response may be positive in the short term,but they should pay more attention to the development status of the company in the later stage and the sustainability of profitability to avoid personal interests being damaged.In addition,it is recommended that the regulator establish a comprehensive regulatory standard composed of indicators such as operating income,operating cash flow,operating profit,and net profit,not only to examine the amount of the above indicators(it is best to specify the number of intervals rather than the number of breakpoints),but also to examine their growth,increase the transparency of information,and prevent listed companies from managing surpluses through various means.This thesis also suggests that listed companies should pay attention to the sustainability of the core competitiveness of subsidiaries,and make rational decisions on whether to spin off and list,only in this way can they obtain long-term capital favor.