The Empirical Study On Contracting Capital-operation Valuation Effects Based On Divestitures

With the outbreak of the global financial crisis, the world economy is showing a downturn in power, a moderate and reasonable contraction strategy is of great significance for the survival and development of enterprises. Enterprises are reducing increasingly their scale of production and beginning to use shrinking technology in day-to-day operation of the capital. The methods of contracting capital-operations such as divestitures, carve-out and share repurchase have been used by many enterprises. They help enterprises get rid of difficulties and provide a favorable environment for the further development of enterprises. Therefore, the study of contracting capital-operations is theoretical relevant, feasibility and practical interoperability.The study of contracting capital-operations in the Western academy began in the 1960s and it is the reflection to The Diversified Business Strategy between 1940s and 1950s. Because western scholars have studied contracting capital-operations much earlier in the field and they have done well in it, as is beneficial to China's research to some extent. Contracting capital-operations of China's enterprises began in the last 1990s and has a gradually expanded trend. In theory, the academic studied definination,classification and theoretical basis of divestiture, Carve-Outs, share repurchase.In empirical aspects, with divestiture being used in the corporate practice, the academic began to study contracting capital-operation through the analysis of divestiture.Unfortunately,the majority of empirical studies evaluate contracting capital-operation by concentrating on the analysis of the financial implications and efficiency before and after divestiture by using event studies or financial indicators (known as accounting research method). In order to avoid repeting former research, this paper studies contracting capital-operation from a new perspective and I hope it will be a new innovation.In this paper, introduction of contracting capital-operation at home and abroad is the basis of research.Firstly, the conception and basic theory of contracting capital-operation and value effect are described and several evaluation methods of contracting capital-operation and value effect are introduced; Secondly, the use of event studies verifies short-term effect value of divestitures and the use of data envelopment analysis verifies long-term effect value of divestitures. Finally, the paper makes a lot of analysis on empirical conclusions and strive to study contracting capital-operation deeply and provide reasonable suggestions for moderate contraction.