Research On The Hollowing Out Behavior Of Major Shareholders Under High Premium Merger And Acquisition

Merger and acquisition is a common means for enterprises to enlarge the size of their assets and to increase their competitive advantage.Driven by competition for control,synergy effect and insider self-interest,High premium mergers and acquisitions have been the norm in the merger.As of September 30,2022,chinese Ashare listed companies had a goodwill scale of about 1,276.5 billion yuan.However,some enterprises did not get good M&A performance after high premium M&A,and the situation of stock price decline and goodwill explosion occurred.At the same time,many negative cases show that major shareholders of listed companies are likely to take merger and reorganization activities as a way of hollowing out,and use high premium merger and acquisition as a cover for interest transmission,Disturbing the capital market order and hurting the interests of the middle and small investors.Therefore,it is necessary to study the tunneling behavior of large shareholder under high premium.This paper takes Jinyi culture as an example and based on the principal-agent theory,return of control theory,information asymmetry theory and GONE theory to analyze the nature and impact of Jinyi Culture’s high-premium merger and acquisition,explores the path and motivation of major shareholders’ hollowing out,and finally comes to the conclusion: First,from the perspective of short-term market reaction,Jin Yi Culture’s horizontal integration of Yue Wang Jewelry and Baoqing Shangpin has won the market’s approval,especially the outstanding performance of the merger of Baoqing Shangpin.The remaining six mergers and acquisitions all showed negative cumulative excess return,the market response was lackluster.Second,with regard to long-term financial performance,During the first stage of the merger,Jinyi Culture has improved its ability to make profit and develop,and has made a contribution to its financial results.However,in the second and third stages of M&A,the profitability,development capacity,solvency and the operating ability of the company all showed a substantial decline.Thirdly,through sorting out the merger and acquisition situation of Jinyi Culture,the results show that the majority shareholders are motivated to empty out during the 2nd and 3rd phases of M&A,and all kinds of documents prove that the majority shareholders are hollowing out.In order to prevent and control the hollowing out of major shareholders,the following suggestions are put forward.Firstly,it is necessary to perfect the inner mechanism,optimize the ownership structure,and exert the function of the independent director and the supervisory board.Secondly,Regulators should attach greater importance to high-premium M&A,enhance the disclosure requirements for the disclosure of goodwill,and make insurance M&A more transparent and transparent.In the meantime,we should perfect the related regulations to protect the small shareholders,and strengthen the penalties of the large shareholders’ empty.Finally,regulators should keep an eye on the movement and usage of the capital pledged by the main shareholders and the performance of the firm over the term of the pledge,and standardise the disclosure of subordinated debt information by large shareholders.