Case Study Of Financial Fraud Induced By M&a Performance Commitment

With the rapid development of the investment market,equity investment in mergers and acquisitions gradually replaced equity investment as the mainstream direction of market investment.Under the implementation of the "small and fast" review system for mergers and acquisitions,the policy environment is more optimized,market barriers are gradually removed,and merger and reorganization of enterprises has achieved new results.The performance bet agreement aims at solving the information asymmetry problem in the process of investment and merger,encouraging the operation of the invested enterprises after investment and merger,and promoting the diversified operation and development of the group after merger and acquisition,which has become an indispensable part of many merger and acquisition cases.On the basis of income method estimation,high premium and high performance commitment complement each other,and the performance expectation that is inconsistent with the actual operating condition of the enterprise will not only run counter to the original intention of performance commitment,but also induce financial risks.Based on the theories related to performance commitment and financial fraud,this paper firstly sorted out relevant literatures at home and abroad,including the motivation of mergers and acquisitions,the application of performance commitment and the performance of mergers and acquisitions.Then the case study method is adopted to analyze the merger plan,merger purpose and transaction impact by taking the time-sharing media for example.Secondly,three factors of the triangle theory are used to analyze that the performance commitment of time-sharing media is not up to the standard,which leads to the fraudulent behavior,including the pressure of performance commitment,the failure of internal control,and the excuses of the management.Finally,the causes,means and economic consequences of financial fraud areanalyzed.The study found that the unreasonable high valuation and high premium resulted in the failure of performance promises,and the management of the target enterprises avoided huge compensation by falsely increasing profits through financial fraud.At last,through the above analysis,the paper finds that while the performance bet is solving the problem of information asymmetry and promoting the diversified development of the company,it is divorced from the actual performance promise,and due to the volatility of the market environment,there may be the risk that it cannot be fulfilled,which leads to the risk of financial fraud.Therefore,merger and acquisition enterprises should strengthen the risk prevention of performance commitment,control the high premium of reasonable valuation and adopt other indicators as assessment objectives.At the same time,we should also pay attention to internal control,establish an enterprise culture of honest management,improve the moral quality of the management,and protect the interests of small and medium-sized investors.