The Research On Motivation And Economic Consequences Of The Equity Carve-out

Equity Carve-Out started relatively late in China.It is a novel financing method in which a parent company divests a subsidiary within a group to list independently.However,Equity Carve-Out has a long history in developed economies abroad,and many foreign scholars have conducted extensive research on their causes and economic consequences.The theoretical understanding of Equity Carve-Out in foreign countries is relatively mature,but due to the lack of cases in China,there has been relatively little research on Equity Carve-Out by domestic scholars.This article selects the case of Xiamen Tungsten Co.’s Equity Carve-Out of XTC New Energy Materials(Xiamen)Co.for listing on the Scientific innovation board to study the causes and economic consequences of the Equity Carve-Out.XTC New Energy Materials(Xiamen)Co.is a leading company in the lithium-ion battery cathode material field,a new energy sub-industry currently vigorously supported by the Chinese government.The Scientific innovation board is the newest segment of the Chinese capital market as an innovative platform that meets national strategic development needs and has introduced relevant policies in recent years to facilitate the Equity Carve-Out listings of high-tech companies.The case of Xiamen Tungsten Co.’s Equity Carve-Out of XTC New Energy Materials(Xiamen)Co.has high research value due to its practicality and typicality.Equity Carve-Out of high-tech companies on the Scientific innovation board has gradually become a trend.Research on this case can provide a specific reference value for other high-tech companies that choose to Equity Carve-Out list in the future.In this study,the process and results of Xiamen Tungsten Co.’s Equity CarveOut of XTC New Energy Materials(Xiamen)Co.were analyzed in detail using event study and EVA analysis methods combined with relevant theories to study the causes and economic consequences of the Equity Carve-Out.The main The Research on Motivation and Economic Consequences of the Equity Carve-out —— A Case Study on Xiamen Tungsten’s carve-out of XTC New Energy Materials conclusions of this study are:(1)the Equity Carve-Out reduced the degree of information asymmetry between external investors and the company’s internal parties regarding high-quality subsidiaries,unleashed the inherent value of XTC New Energy Materials(Xiamen)Co.,and greatly satisfied its financing demand;(2)in the short term,the Equity Carve-Out improved the financial performance of the parent and subsidiary companies and brought positive excess cumulative returns to the parent company after the announcement date.The Equity Carve-Out significantly improved the enterprise value and shareholder wealth of the parent company;(3)the Equity Carve-Out significantly enhanced the subsidiary’s visibility,and the parent company could benefit from its brand effect.Equity Carve-Out can help parent and subsidiary companies complement each other and further enhance their competitiveness.