On The Risk Of Chinese Listed Companies'Performance Commitment Of M&A: A Case Study Of GI Technologies Co., Ltd.

Performance commitment refers to the target company makes a commitment to future profit and signs a compensation agreement for the difference between the expected profit and the actual,when the listed company conducts mergers and acquisitions.Reducing the information asymmetry and making the reasonable price of M&A are the intention of performance commitment.However,many risk events have been derived as performance commitment widely applied,being criticized by investors and endangering the development of China's captial market.Therefore,analyzing the risks of listed companies' M&A performance commitment has important significance for improving the risk awareness of companies and investors,and improving related regulation of authorities.The thesis expounds the theory of performance commitment and the present status in China.By selecting the case of GI Technologies Co.,Ltd.acquired Anpu in 2015 to introducing the background and the performance commitment and exploring the various risk effects,then analyzing the risk causes and conclusions,putting forward policy suggestions and making outlooks of subsequent topics.The main conclusions of this thesis are as follows:1.Performance commitment of M&A has hidden various risks.In the case of this thesis,performance commitment of Anpu brought risks of high valuation,unfulfilled commitment and goodwill impairment to GI Technologies Co.,Ltd.And it brought risks of major shareholders stocks reduction,the target company sold and interest transfer to stockholders.2.Risk events have negative impacts on listed companies.In the case of this thesis,the financial capability of GI Technologies Co.,Ltd.first increase slightly and then fall sharply,showing small increase in asset size,but the profitability and growth ability are reduce greatly.The market reaction is short-term positive and negative in long term,showing the CAR jumps during M&A,but decreases widely under the influence of subsequent events.3.There are various reasons for risks of M&A performance commitment.In the case of the article,a variety of factors such as the motive of “beautification” performance,the requirement of performance commitment in the earning evaluation M&A,and the positive effect of M&A.4.Relevant regulations must be improved in order to make performance commitment play the due role.The regulator should regulate the asset appreciation during M&A,prohibit the transfer of benefits by modifying clause of performance commitment,strengthen the disclosure of performance commitment information,and make entire education of investment for investors.This thesis attempts to improving the risk awareness of companies and investors in performance commitment,by analyzing the case of GI Technologies Co.,Ltd.acquired Anpu.However,the analyzation is not comprehensive and the preventions are limitations because the single case cannot cover all risks.Following research will complement the problems.