A Study On The Spin-off Listed Companies In China

Spin-off listing is a familiar concept on China’s capital markets. As early as in2000, Jade Bridge (600657.SH) spins off its attach Jade Bird Universal (8095.HK) for listing, creating the narrow sense of Spin-off in China. Since then, the Spin-off have become a hot topic on the capital markets. During the twelve years in the past, however, only twelve Spin-off cases of the listed companies in China (excluding Hong Kong and Taiwan) happened. So slowly or even stagnation of development situation is not consistent with the positive attitude of domestic listed companies. Until2010, the CSRC announced the permission for the spin-off of main board listed companies whose attaches within the territory of the gem listing. Spin-off begins to be popular again.In2012, due to the slowdown of the macroeconomic growth, many listed companies present poor results. What is more, the group of listed companies is experiencing a tight liquidity condition as the CSRC made the approval of equity financing much more difficult.In this context, in order to seek new growth points and be able to effectively raise funds to improve the cash flow situation, many listed companies turn their focus on the Spin-off again. However, it also triggered a major controversy on the possibility of improving the business performance of listed companies through Spin-off. This article focus on whether Spin-off is able to better the operating result of listed companies, hoping that the results of this research will contribute to the solution of this disputation..There are three main research methods in this paper:event study method, the financial analysis and case analysis. Though my research, I found out some interesting conclusions.In the short term, Spin-off can significant increase the market values of related listed companies. In the long term, things become more complicated. The Financial data shows that situation of some listing companies had been improved indeedly. However, there are aslo some companies whose conditions went bad after the Spin-off. In order to find out the reasons that cause these differences,Ⅰ compared two classic Spin-off cases in China. Finally, I found out that only companies that use the Spin-off strategy to foster new growth points or to cut out the toxic assets can get benefits from equity carve-outs.There are some innovations in this paper. Firstly, the former domestic researches on spin-off mainly through the form of case analysis and special comprehensive study of the listed company spin-off behavior is rare. My resreach focus on the Spin-off behavior of the listed companies comprehensively, making some supplement to the former studies. Secondly, Ⅰ tried to find out the factors which can affect the short-term effect of Spin-off. It’s rarely seen in the former domestic researches. What is more, Ⅰ used financial analysis to assess the long-term effect of spin-off, instead of event study method.However, there are some defect in my paper. Firstly, Ⅰ learned the event study method by my own. It was possible that Ⅰ didn’t handle it skillfully. Secondly, the information and data for the research was collected from public ways and some professional databases by myself. It was possible that Ⅰ miss a few information and data. What is more, Ⅰ only worked into some aspects of Spin-off. There are still many issues remain unsolved. Ⅰ hope Ⅰ still have the opportunity to finish them in the future.