Research On The Causes, Consequences And Countermeasures Of Goodwill Impairment Under The High Premium Acquisition Of Guangdong Jushi Chemica

With the development of China’s economy,the number of mergers and acquisitions of listed companies is increasing.Among them,the management of listed companies has formed many high premium mergers and acquisitions in order to expand the market and improve the confidence of investors,which has led to the generation of large goodwill.With the end of the performance commitment period,the change of market environment and other reasons,the performance of the merged enterprises has been significantly reduced compared with that of the merger and acquisition,making its value valuation plummet,and listed companies have begun to accrue large amounts of goodwill impairment,resulting in a sharp fluctuation in the financial performance of listed companies,which has seriously affected the stability of China’s capital market.In this context,this paper selects the case of Guangdong Jushi Chemical Co.,Ltd.,a listed company on the Science and Technology Innovation Board,which acquired Guanzhen Technology at a high premium and subsequently accrued a large amount of goodwill impairment,to sort out the process of the event.On this basis,it analyzes the causes and effects of high premium M&A and goodwill impairment,and puts forward corresponding countermeasures and suggestions.Through analysis,this paper finds that there are four main reasons for the high premium M&A of Jushi Chemical:(1)The internal reasons for the management’s insufficient prediction of operational risk and performance pressure;(2)The selection of the evaluation base date is unreasonable;(3)The predicted cost of the period is too low;(4)The appraisal agency that conducted the value appraisal for Guanzhen Technology is not in place.The reason why Jushi Chemical has accrued a large amount of goodwill impairment for Guanzhen Technology lies in the risks in the data base used by Guanzhen Technology for value evaluation,the decline in operating performance,the need for earnings management by Jushi Chemical’s management,and the unreasonable performance commitment plan.Based on the above reasons,this paper puts forward the following countermeasures and suggestions to reduce the risk caused by goodwill impairment: for mergers and acquisitions enterprises,the value of the target company should be reasonably estimated,appropriate internal control to limit the management’s decision-making power in mergers and acquisitions should be formulated,and the transaction process of mergers and acquisitions should be standardized;For regulators,the scope of M&A information disclosure should be expanded,the value evaluation system and the subsequent measurement method of goodwill should be improved;For investors,they should rationally look at high-price M&A events and goodwill impairment events and invest rationally.