Study On The Economic Consequences Of Goodwill Impairment In G Company’s Merger And Acquisition

With the intensification of market competition,more and more enterprises are in urgent need of expanding their operation scale.Since 2014,the tide of mergers and acquisitions has been surging in China’s capital market.Many listed companies carry out merger and acquisition activities in order to enhance their own strength to expand operation scale and better establish themselves in the market.In recent years,Internet companies have developed rapidly,and some enterprises tend to prefer the Internet industry with a good development trend in order to develop.The Internet industry is characterized by light assets and strong earning ability.These characteristics tend to make the acquirer have an overly optimistic attitude towards future earnings,and adopt the income method to conduct high-premium mergers and acquisitions,resulting in huge goodwill problems after mergers and acquisitions.If it fails to meet the expectations of the enterprise in the later stage,huge goodwill is a "thunder" buried in the enterprise,which will cause many risk problems at any time.The enterprise has to release the risk by drawing a large amount of goodwill impairment,which will affect the profit of the enterprise.In this thesis,G Company,which makes a large one-time provision for goodwill impairment in 2020,is selected as the research object.Firstly,through consulting the company’s annual report,the formation and impairment of the company’s huge goodwill are sorted out.Secondly,in the part of causes of goodwill impairment,through the research,we find that: at the macro policy level,the elasticity of standards and accounting policy changes will affect the occurrence of goodwill impairment behavior;At the micro level,the high premium behavior in the process of merger and acquisition will increase the pressure of goodwill impairment.In previous years,the company did not standardize the provision of goodwill impairment and used goodwill to reduce the burden of earnings management.By analyzing the market reaction of goodwill impairment,financial performance and the influence of non-financial indicators,it is concluded that the capital market and investors will have an obvious reaction to the abnormal goodwill impairment event of enterprises.Meanwhile,goodwill impairment is not conducive to the daily operation and development of enterprises and has a negative impact on the company.Finally,through the analysis,the conclusions are drawn,including: the subsequent measurement method of goodwill has certain disadvantages in practical operation,so it is necessary to standardize and constrain the impairment behavior of goodwill from the level of standards and regulations;In the process of merger and acquisition,the management is blindly confident and does not have a correct understanding of the risk of goodwill.In the face of goodwill impairment,investors are in a disadvantageous position relative to enterprises.Based on the above analysis conclusions,specific suggestions are put forward for government supervision,micro company level and external investors to prevent the risk of goodwill impairment and reduce the harm of goodwill impairment.