The Risk Of Overconfidence Of Management And Impairment Of Goodwill In The Process Of Enterprise Mergers And Acquisitions

China's listed companies experienced large-scale industry-wide goodwill impairments in 2017 and 2018,which was the result of the unabated merger and acquisition boom in the past,and goodwill impairments also brought irreversible negative costs for listed companies and the real economy.Therefore,it is necessary to analyze the reasons for the concentrated impairment of goodwill throughout the industry.This article is based on the two cases of difference in goodwill impairment of Xinbang Pharmaceutical,and explores how the overconfidence of management during the merger and acquisition process affects goodwill impairment risk.In the theoretical analysis of how management's overconfidence affects its goodwill impairment risk,this paper introduces two intermediary factors for demonstration,namely,M&A premium and M&A investment efficiency.It is pointed out that if the management of the company is overconfident during the merger and acquisition process,it will increase the premium rate of its merger and acquisition.At the same time,the enterprise will implement an inefficient merger and acquisition investment,and the investment efficiency is low,resulting in the recoverable amount of the goodwill-related asset group after the merger and acquisition is lower than the cost,leading to the provision of goodwill impairment losses.At the same time,a systematic empirical test was conducted on the theoretical analysis conclusions.The results show that management overconfidence can significantly increase the risk of goodwill impairment.Based on the results of theoretical analysis and quantitative analysis,this article focuses on the case of the difference in the goodwill impairment of the two mergers and acquisitions of Xinbang Pharmaceutical,in order to demonstrate whether the difference in management's overconfidence has caused the difference in goodwill impairment.Through systematic index measurement,empirical methods and case background materials,it is concluded that the management of Xinbang Pharmaceutical did not show overconfidence when merger Keikai Pharmaceuticals,and the resulting M&A premium level was not too high,and the M&A did improve the company's Value,goodwill formed by mergers and acquisitions has not been impaired so far.However,Xinbang Pharmaceutical has overconfidence in the management of Sinopeptide's biochemical mergers and acquisitions,which promotes a higher level of merger and acquisition premiums than Kekai Pharmaceuticals.At the same time,the integration after the merger is not good,the investment efficiency of the merger is not high,and goodwill occurred impairment loss in 2018.Combining the results of the case analysis,theory and quantitative analysis of Xinbang Pharmaceuticals,it is concluded that the overconfidence of the management in M&A will increase the risk of goodwill impairment through the increase in the M&A premium level and the low efficiency of M&A investment.Management overconfidence can be used to explain the phenomenon of goodwill impairment of most companies.Finally,this article proposes to start from the corporate governance mechanism,optimize the management behavior from the root and from a regulatory perspective,and regulate corporate mergers and acquisitions to avoid the occurrence of centralized goodwill impairment,in order to suppress the irrational behavior and consequences caused by overconfidence.The core purpose of this article is to analyze the enterprise's goodwill impairment from the perspective of non-economic factors,and to provide new ideas for reducing the risk of goodwill impairment.