Research On The Value Creation Path Of Equity Carve-outs Of WuXi App Tec

With the further development of capital market in China,Chinese companies are paying more attention to capital operation.Because of negative synergies widespread in large companies after the current M&A frenzy whileChinese multi-level capital market initially established,more and more companies are beginning to seek to create value for companies through the use of equity carve-outs.WuXi App Tec's equity carve-outs is the first successful case of using the equity carve-outs in the return of the Chinese stock market.For the Chinese stock companies that have the ability to independently choose the place of listing,their consideration in capital operation is more mature.This paper takes the case of WuXi App Tec's equity carve-outs as the research object,and combines the background of the return of the stocks in the Chinese stock market,and deeply analyzes the path of the equity carve-outs to the value creation of enterprises.Most of the existing empirical literature mainly uses large sample data to test whether the equity carve-outs is beneficial to the value creation of enterprises.Case studies also focus on the analysis of the causes and economic consequences of the equity carve-outs,but ignore the research on the role of equity carve-outs on corporate value.This paper uses information asymmetry theory,market value management theory,multi-level capital market theory,value and other related theories.First,this paper analyzes the economic drivers of equity carve-outs,and then finds that the main driving force for identifying corporate value is financing activities,investment activities and business activities.Exploring how the equity carve-outs improves the efficiency of the three major activities,this paper constructs a theoretical framework for the impact of equity carve-outs.Combined with the case of WuXi App Tec,it analyzes how WuXi App Tec changes the value of the enterprise through equity carve-outs.Finally,it uses the capital market data and corporate financial data to verify the economic consequences of theequity carve-outs.The completed analysis chain makes this article deeply explore the impact of equity carve-outs on corporate value and deepen the research content in this field.This paper draws the following conclusions:(1)Equity carve-outs,as capital operation mode,ultimately affect corporate value by changing corporate's financing efficiency,investment efficiency and operational efficiency.(2)In terms of financing efficiency,due to motivation of market capitalization and financing,enterprises will use the equity carve-outs to reduce the undervalued market value,to broaden financing channels,to reduce financing costs,and to improve the financing efficiency of enterprises.(3)In terms of investment efficiency,due to internal capital market drivers,enterprises will hope to close part of the ineffective internal capital market through equity carve-outs,to reduce agency costs and to improve corporate investment efficiency.(4)In terms of operational efficiency,equity carve-outs as an asset restructuring method needs to be combined with the business strategy of theenterprise.When the enterprise is vertically integrated,it will tend to use the equity carve-outs to improve the positive synergy effect of the enterprise and improve business efficiency.Based on the above research conclusions,the article proposes the following recommendations:For enterprises,it is first necessary to make clear that the spin-off is a rational decision based on their actual needs,rather than blindly following the market.Only by combining the business development strategy of the enterprise and taking into account the actual needs of the three major activities of the enterprise,the equity carve-outs can truly create value for the enterprise.The regulatory authorities should actively promote the construction of Chinese multi-level capital market and provide good market conditions for the equity carve-outs.At the same time,it is necessary to strengthen the examination and approval of the equity carve-outs and avoid the occurrence of disorderly behavior,thus promoting the healthy development of spin-off market in China.This paper supplements the research on the equity carve-outs,and also provides reference for other companies.