Analysis Of Performance Commitment And Earnings Management In Mergers And Acquisitions

At present,China's economy is in the transition stage from high-speed development to high-quality development.Merger and reorganization,as an important way for listed companies to optimize resource allocation and realize industrial upgrading,is widely favored by the capital market.Recently,the regulatory authorities have also implemented a series of important reform measures on merger and reorganization,further releasing policy signals to encourage merger and reorganization of listed companies.To solve the problem caused by asymmetric information in the merger,acquisition and reorganization,unfair trading in be acquirers tend to the acquiring firm performance commitment,however,some are acquirers to enhance their valuations,obtain ideal trading price,to the acquiring firm beyond the actual profitability high performance commitment,which is the current capital market performance promise a promise incidents in one of the important reasons.In addition,some enterprises in particular "accurate" after the completion of the performance commitment performance change face,the commitment period of the real profit situation really provoking thinking.Therefore,in view of the phenomenon of performance change after the commitment period,this paper questions whether there is earnings management in such enterprises during the commitment period.Based on this,this paper selects the enterprises that make high performance commitment in merger and reorganization and their performance changes after the commitment period.Firstly,it analyzes the motivation of earnings management from three aspects: high performance commitment,avoiding performance compensation and market value management.Then,it analyzes the possible means of earnings management during the commitment period,such as aggressive revenue recognition policy,loose sales policy,etc.Finally,the paper analyzes the impact of earnings management behavior on small and medium investors.The analysis found that there were high performance commitments during the network merger and reorganization,and high performance commitments and market value management were the causes of earnings management during the network commitment period.Moreover,multiple earnings management methods were adopted to modify the performance during the commitment period,which would worsen the corporate image and damage the rights and interests of small and medium-sized shareholders.Although this paper selects specific cases for specific analysis,the phenomenon of "performance change after commitment period" is a common phenomenon,and many empirical articles have proved the existence of earnings management during the commitment period.Therefore,according to the article,case conclusion to some extent,generality,i.e.,merger,acquisition and reorganization,the enterprise to obtain the high valuations will make high performance commitment,due to the high performance commitment from the enterprise profitability,actual value compensation and to avoid the performance management,enterprise has enough surplus management motivation,and this kind of behavior will eventually harm the rights and interests of minority shareholders.Therefore,this paper suggests: before the performance commitment is signed,improve the valuation method,as far as possible to enhance the rationality of valuation;When the performance commitment is signed,improve the performance commitment agreement,such as extending the period of performance commitment and improving the performance assessment indicators;After the performance commitment is signed,the supervision will be strengthened and the punishment will be intensified.