On The Motivation And Economic Consequences Of The Enterprise’s Spinoff And Listing

With the in-depth development of economic globalization,spin-off and listing,as an important restructuring method for enterprises to face global market competition and adjust their structure,has been more and more respected by domestic and foreign enterprises.Although the practice of spin-off and listing in China started late,developed slowly and was difficult to succeed,there have been more than 40 enterprises planning spin-off and listing in China since 2016,which shows great demand for spin-off and listing.Most of them are private enterprises expanding rapidly in the opportunities of reform,opening up and globalization.However,due to the lack of successful cases in China,most of the relevant researches are focused on the theoretical level and the special group of state-owned enterprises,and the relevant case studies are also few.In order to meet the increasing demand of domestic enterprises for spin-off and listing and enrich the case study of spin-off and listing,this paper selects this research topic.This paper adopts case analysis method to study the process,motivation,economic consequences and inspiration of the spin-off and listing of yum brands in China in 2016.The main body is divided into four parts.The first part is the theoretical analysis of spin-off listing,the characteristics and types of spin-off listing are introduced,and the main motivation theory of spin-off listing is reviewed.The second part is the case analysis of Yum group,including a brief introduction of Yum Group and Yum China.According to the time sequence of the one-year spin-off and listing process,this part also focuses on the four major motivations of spin-off and listings,combined with the internal and external environment at that time : Restoring the group’s valuation in the capital market;Optimize resource allocation and localization of Chinese business;Independent listing financing,seeking development capital;Spin off Yum China to shift investment to emerging markets.The third part is the analysis of the economic consequences of Yum’s spin-off and listing in China.In order to better evaluate its economic consequences,analyze the consistency between actual results and target drivers,this paper analyzes the short-term capital market response of the parent company,the medium and long-term financial indicators of both the parent company and the and subsidiary,as well as the non-financial indicators of the subsidiary,whichdraw the following conclusion: the group’s share price in the announcement period accumulated excess yield is positive,and shares with the implementation of the plan and further disclosure of information,fluctuated upward trend;The group and yum China have improved their solvency,profitability,operating capacity and earnings per share.Yum China has significantly improved its non-financial indicators such as control right,localization innovation and brand identity.The fourth part puts forward four suggestions for the enterprises to be split and listed: first,the enterprise should clarify the background and motivation of the spin-off and listing,avoid blindly following or treating it as a tool to “circle money”,and constantly modify the motivation with the change of environment and conditions;Second,reasonable selection of the scope,time and listing location of the spinoff ensures that the independent operation of the subsidiary and the core competence of the parent company are not affected by the spin-off.Considering both the conditions and feasibility of listing location,and weighing the advantages and disadvantages brought by different characteristics of the market.At the same time,we should avoid sending negative signals to the market in sensitive period orseparating and listing without strategic planning.Third,keep a close eye on the healthy development of reasonable spin-off motivation,especially to avoid the subsidiaries being acquired by hostile companies orlosing the autonomy to implement strategic goals.Fourth,performance evaluation should continue to follow up its subsequent development.The spin-off and listing of an enterprise brings about changes such as internal governance structure,market scope and business remodeling,and independent management right of subsidiaries.Performance evaluation is required to check whether the enterprise meets the standards,in order to timely supervise and adjust the performance.At the same time,performance evaluation should combine the short-term market reaction,long-term financial indicators with non-financial indicators such as control right,corporate image and social effect to guide the benign development of enterprises.The study of this paper is helpful to supplement the case study of the spin-off and listing of modern non-state-owned enterprises and transnational enterprises,and introduces the theory of localization into the motivation of spin-off and listing,which provides more motivation choices and ideas for the spin-off and listing of transnational companies and enterprises with international business.In addition,through case analysis,this paper proposes the inspiration of dynamic correction of the motivation of enterprise spin-off and listing,and puts forward that non-financial indicators such as control right,localization innovation and brand recognition should be combined in the performance evaluation method after spin-off and listing,so as to provide some new ideas for the research on the motivation and economic consequences of spin-off and listing in the future.