Research On The Impact Of Performance Compensation Commitment On Shareholders' Benefits

With the continuous increase in the number of M&A transaction events,the number of performance commitment events has also shown an explosive growth.The original intention of the China Securities Regulatory Commission to make performance commitments is to maintain order in the securities market,ensure the quality of assets injected by mergers and acquisitions,provide incentives and constraints to management,and ensure the performance of mergers and acquisitions,thereby protecting the interests of small and medium shareholders.However,it is foreseeable that due to factors such as asymmetric information and incorrect power,small stockholders are in a weak position in mergers and acquisitions.Instead,performance commitments have become a tool for major shareholders to embezzle the interests of small and medium shareholders.It is not uncommon to obtain high premiums and large cash dividends through performance commitments..This article starts from the case of Microgate Technology's M&A of Xingyuan Electronics.First,it sorts out the background of the case,the process of mergers and acquisitions reorganization,and the formulation and performance of performance commitments.Secondly,this article analyzes the rationality of target profit,the rationality of M&A premium,and the behavior of management.Finally,this article explores the impact of Microgate's performance commitment on shareholders' benefits through market response analysis,financial analysis,and cost-benefit analysis of major shareholders.The results of the study found that:(1)Microgate Technology signed a performance commitment with a false target profit during its acquisition of Xingyuan Electronics,and obtained an unrealistic M&A premium;(2)Microgate Technology formulated a performance commitment for the short-term benefits of small and medium shareholders.After the commitment period,the interests of small and medium shareholders have been violated.During the commitment period,small stockholders responded well to the market.Performance commitments can produce short-term benefits to the interests of medium stockholders.However,after the commitment period,the company's real bad performance will be exposed.Major shareholders also use goodwill impairment,share reduction,etc.Encroach on the interests of small and medium shareholders.(3)Microgate Technology has formulated performance commitments to obtain long-term benefits for major shareholders.The cost-benefit of large shareholders as a whole is very high.Finally,this article puts forward relevant opinions and suggestions to regulators,small and medium investors,enterprises and their management,and evaluation agencies.