Research On The Performance Of ST Company’s Divestiture In China

China’s risk warning system has been implemented since 1998.By the end of 2018,there are 619 companies(811 cases in total)that have been implemented ST in the A-share market.In addition,the official operation of the risk warning board in 2013 indicates that the problem of ST companies has attracted the attention of regulators.According to statistics,about two-thirds of ST companies in China have carried out asset restructuring every year,and about half of them use divestiture.It can be seen that divestiture is an important way for ST companies to restructure.This paper reviews the literature on the performance of divestiture of listed companies at home and abroad,and finds that most of the research results show that divestiture can produce some short-term performance,but its long-term performance is not sustainable,and there are some contrary conclusions.Compared with the general listed companies,ST companies can get rid of the difficulties through divestiture besides the need of development strategy.However,there are few studies on the performance of ST companies’ divestiture in China.So the results of this study can enrich the theory of this aspect and provide reference value for ST companies when they choose divestiture and investors invest in ST companies.The innovation of this paper is to expand the sample by using more years of data during the extension of the study period,so that the empirical results are more reliable and can represent the overall situation of the divestiture performance of ST companies in China;and to use event study method and principal component analysis method with higher recognition to study both short-term and long-term performance,so as to make the results more convincing.In the theoretical part of this paper,the related concepts and theories are introduced and the reasons for divestiture are analyzed,which provides a theoretical basis for the following hypotheses.Then,the process of continuous improvement of the risk warning system,the changing trend of the number of ST companies,and the status quo of ST companies’ divestiture are analyzed.In the empirical analysis,draw lessons from the existing literature on restructuring and divestiture performance research methods.Through rigorous sample screening,129 research samples were selected from ST companies which implemented divestiture in 2006-2015.The abnormal return on the first announcement day of divestiture and its five trading days before and after the announcement date are analyzed by event study method to determine whether there was short-term performance.In order to reflect the profitability,operation,development and solvency of the company,some financial indicators are selected to establish an evaluation system of financial indicators,which can fully reflect the financial situation of the enterprise.Principal component analysis is used to analyze the financial situation of ST company in the previous year,the current year,the next year and the following two years before the implementation of divestiture,and to judge the effect of divestiture on ST company by comparison.And test whether the performance of divestiture is significantly different from 0.The empirical results show that ST company has positive short-term performance and positive long-term performance in a certain period,but not sustainability.Finally,this paper analyses the reasons for this result,and puts forward suggestions from three perspectives of regulators,ST companies and investors,so that ST companies can achieve more effective divestiture and reduce unnecessary losses of investors.