Analysis Of The Reasons And Problems Of Consolidated Goodwill Impairment

In recent years,M&A activity of listed companies has continued to heat up,and goodwill assets have grown rapidly under the catalysis of “high valuation and high performance commitment”.By the end of the third quarter of 2018,goodwill has reached 1.45 trillion yuan,becoming “The Sword of Damocles” on the heads of many listed companies.In 2017 and 2018,a number of listed companies accumulate huge loss of goodwill impairment,resulting in a sharp decline in business performance and causing incalculable losses to small and medium investors.The issue of goodwill impairment highlights.In this paper,the research questions are concentrated on the goodwill impairment,and the research is carried out by literature research method、 quantitative analysis method and case study method.First of all,the review of the literature from the nature of goodwill,the reasons and problems of the goodwill impairment laid the theoretical foundation for the following.Secondly,the quantitative analysis method is used to analyze the current situation of mergers and acquisitions,consolidated goodwill and goodwill impairment of A-share listed companies in China.Then,this paper combines the case of The ACECO M&A U9 TIME and systematically analyzes the reasons and problems for its goodwill impairment.The research results show that: 1.High performance commitment and performance decline are the direct reasons for the impairment of goodwill.U9 TIME business performance declined,and the consolidated goodwill failed to exert excess profitability,so goodwill was impaired.In addition,in order to complete the high-performance commitments,a series of high-risk investment behaviors were carried out by U9 TIME,and the asset impairment loss of up to 1.13 billion yuan was accrued in the next year,which further caused the impairment of goodwill.2.The overvaluation of consolidated goodwill is the root cause of the impairment of goodwill.Affected by factors such as high valuation and not fully quantified the value of net identifiable assets,the initial recognition of goodwill was falsely high,deviating from the nature of goodwill,and the result was the impairment of goodwill.3.The impairment of goodwill has problems of earnings management and insufficient information disclosure,which causes distortion of accounting information and deceives investors.The management has a large discretion on the results of the goodwill impairment test,and the insufficient disclosure of goodwill impairment information provides further control space.In this case,in order to protect the interests of major shareholders,the first time of goodwill impairment was delayed,and the second time of goodwill impairment was expected to be suspected of financial “washing a bath”.Finally,this paper proposes five measures to prevent the risk of goodwill impairment from the perspective of listed companies and regulatory agencies.The management of listed companies should carefully carry out M&A activities.They should not blindly acquire hot topics that are sought after by the market.In particular,they should pay attention to the continued profitability and talent training mechanism of the acquired party.They should not rely too much on the valuation adjustment mechanism and should pay full attention to the investment behavior of the acquired party during the gambling period.Regulators should strengthen the supervision of the initial confirmation of the consolidated goodwill;strengthen the supervision of the credit information disclosure of goodwill;and improve the accountability mechanism for the huge amount of goodwill impairment caused by high premium.