The Effectiveness Research Of Profit Forecast Compensation Agreement Under The The Acquisition Premium

In the capital market of our country,the merger,acquisition and reorganization of listed companies has become an important way improve performance and achieve business transformation,and the merger have a rapid development in recent years.The recent data shows that frequent mergers and acquisitions activity areas are mainly concentrated in emerging industries,including computer,communications,and other electronic equipment manufacturing,etc.In order to ensure the interests of investors and correct the m&a valuation,in 2008,the securities and futures commission issued the rule which require both parties must profit forecast compensation agreement.But in the later found in practice,the agreement calls for the property still independent accounting in a few years after the merger,which get in the way of integration of the assets for m&a.So the CRSC cancelled the mandatory rules in 2004.But because of the height of the m&a market game,the acquiring firms still ask original shareholders of underlying assets to sign the profit forecast compensation agreement.They think the agreement can protect their interests.Denotative m&a brings to the enterprise fast growth,it comes with a certain risk at the same time.As for the now popular high valuation of mergers and acquisitions,athough some enterprises perfect deduce the underlying assets "alchemy",but the negative impact it brings to the enterprise has to be reckoned with.The Shenzhen stock exchange said:” Due to expected return m&a target standard goodwill impairment provision and performance fails to fulfill its commitments and even through the way of change the commitment to escape responsibility by the focus on the exchange.”From the perspective of premium mergers and acquisitions,this article first introduces the merger premium and the concept of earnings forecast compensation agreement.And the theoretical part is composed of three part,valuation of mergers,acquisitions motivation and m&a and m&a performance.Surrounding the acquisition premium,I study the documents of Mergers and acquisitions motivation and m&a premiums from correlation factors.I settle the literature from two aspect,the one is mergers and acquisitions motivation and the other is m&a premiums from correlation factors.Finally I refer to the research about the profit forecast compensation agreement.In the fourth part,I collect the current situation of China's electronic information industry mergers and acquisitions,and doing some corresponding analysis.In this paper,I use literature analysis,normative analysis and event study and case study method.I want to know whether the profit forecast compensation agreement is valid under the background of premium m&a.The results of the study are as follows.Most of the m&a in China electronic information industry are at a premium.And most of the companies will sign the profit forecast compensation agreement.But the agreements do not do the good job on correct valuation and protect the interest of small and medium-sized shareholders.Instead,to a certain extent,it cause the rights and obligations of the asset unequal.And boost the acquisition premium.Once the good faith mechanism is destroyed,the interests of investors will also be destroyed.So the profit forecast compensation mechanism in China still has a lot of places need to be improved.