The Performance Commitmentand Earnings Behavior Of Acquisition By Private Placement

With the increasingly fierce competition in the market environment,mergers and acquisitions and reorganizations have become an important way for many enterprises to seek survival and development.The number of domestic targeted issuance-type mergers and acquisitions has also increased in recent years.In order to protect the interests of small and medium-sized investors and reduce the M&A premium,the performance commitment system has been further emphasized and applied along with the reform of the shareholding structure.However,due to the insufficient performance commitment system in China's mergers and acquisitions and reorganization,many opportunistic behaviors have been brought to the target companies.The target companies often use earnings management to beautify their performance in order to achieve performance commitments or reduce the pressure on the performance compensation of major shareholders.This behavior not only caused an irreversible impact on the future development of the enterprise,but also greatly damaged the interests of small and medium shareholders.At present,most of the existing domestic literature are dedicated to the research of earnings management behaviors under the directional merger and acquisition period or the performance commitment period,and when it comes to performance commitments,most of them are discussed around the reform of equity division,Few literature will combine the two to study earnings management as a long-term strategic strategy.When performance commitment is no longer a mandatory requirement,the motivation of performance commitment parties to make high premium commitment has been doubted.At the same time,based on this,in order to achieve the high commitment performance far beyond their actual profit level,will the target company use earnings management to increase profits?Or before the targeted issuance of M&A,the target party has carried out earnings management to obtain a high M&a premium,resulting in weak performance in the subsequent gambling period?Based on this research background,this paper takes Huanghe whirlwind's acquisition of Shanghai Mingjiang as an example,taking its targeted issuance in 2015 and signing the performance compensation commitment agreement as the background,and based on the existing theory,adopts the method of case study,the timeline of the entire M & A event is divided into three stages: before the targeted issuance,during the performance commitment period,and after the bet fails.This paper analyze howShanghai Mingjiang uses different real and accrued earnings management methods at different stages,and further explore whether there is a connection or difference in earnings management behaviors and motivations at different stages.Based on this,put forward some constructive opinions useful for the M & A market,help regulators improve the relevant performance commitment system,and strengthen the supervision of the M & A market.Through the research of this paper,we find that: firstly,enterprises prefer to adopt accrual earnings management in the period of performance commitment,compared with the period before directional issuance.In this case,before the targeted issuance,the enterprises mainly adopt the means of earnings management to postpone the capitalization time point to achieve the tax saving effect;during the gambling period,the enterprises adopt the purposes of increasing the capitalization ratio,changing the revenue recognition criteria and randomly manipulating the government subsidies to achieve the goal of income smoothing and performance reaching the standard;secondly,high performance commitment will increase the degree of earnings management;thirdly,earnings Management behavior will damage the interests of small and medium-sized shareholders after the performance commitment period.