The Impact Of Valuation Adjustment Mechanism On Investor Protection In The M&A

Valuation Adjustment Mechanism is a gambling agreement.It is an agreement between the acquirer(including the investor)and the transferor(including the financing side)in the event of a merger(or financing)agreement for future uncertainty.In the event of an agreement,the investor may exercise a right;if the agreed conditions do not arise,the financing party exercises a right.Performance commitment originated in the western capital market is a valuation adjustment mechanism,the acquirer(investors)provided funds at the same time,set some provisions to restrict the transferor(financing)to protect their own interests.With the M&A market becoming more and more active,the transaction has been more and more innovative in the M&A.As a new type of M&A contract,Valuation Adjustment Mechanism has been widely applied to the investor protection mechanism.This paper adopts the method of case study,taking Shanghai Infront Microelectronics Technology Co.,Ltd.ST Shun Yuan back-door listing as an example.We try to find answers to the following questions:(1)How will the VAM made during the major asset restructuring of listed companies affect minority shareholders;(2)It is reasonable to set the amount of performance compensation commitments;(3)When VAM fail to meet the standards,what is the difference between the effect of other forms of compensation on investor interest and cash compensation;(4)What is the investment decision of small and medium investors on the VAM of public companies?This article starts with the concept of VAM,summarying the research achievements of scholars both at home and abroad,combined with the theory of principal-agent theory,information asymmetry theory and large shareholders' encroachment on minority investors' benefit theory.This paper briefly analyzes the ways in which different stakeholders safeguard their own interests and fair market in terms of performance commitments.The results show that the market will be stimulated by the period of VAM and large shareholders' cash compensation.The excess earnings that investors received at this time are positive,and the cumulative excess returns have risen steadily.From this perspective,the interests of small and medium investors are increased.In times of poor performance,the performance of a share price after receiving a negative message is a rapid decline.The excess returns for investors are positive at this point,and the cumulative gains in excess earnings have risen steadily.In this period,the interests of small and medium investors have been reduced.And the data show that performance commitments have a short-term effect on share prices,where investors receive higher short-term gains than long-term gains.The long-term value of the company also depends on strengthening management,improving the main business level and so on.Performance promised not on behalf of the company's actual performance level,only the future of a is expected,investors should hold a cautious attitude for such items,rational investment,so as to achieve the purpose of maintaining their own interests.