Research On The Motivation And Performance Of Divestiture In Continuous Loss-Making Enterprises

In 2018,due to the impact of macro factors such as economic growth decline,many listed companies were confronted with greater performance pressure and financial pressure.In order to improve the performance,many enterprises issued the announcement plan to implement the divestiture.The "divestiture tide" set off in China's capital market.Although the divestiture enable enterprises to improve their performance efficiently in short term,whether it can substantially improve the performance of enterprises has not been drawn an unified conclusion.Therefore,the research on the divestiture performance of listed companies is of great practical significance,which can provide more reference value for other listed companies to implement divestiture.In this paper,the event of divestiture from PKU Health Care Corp in 2015 is selected to be an example.By analyzing the characteristics of the background and transaction,this paper finds out the major reason of the transaction is that the enterprise need to improve its performance and turn the loss into profit quickly at the risk of Special Treatment.And then,this paper analyses the market performance by event-study method,evaluates the impact of the divestiture and the enterprise performance by comprehensive performance evaluation method,which combine horizontal and vertical analysis with qualitative and quantitative analysis.By looking for the causes of performance changes,we can judge whether the transaction has substantially improved the performance of PKU Health Care.This paper draws the following conclusions: the purpose of divestiture in enterprises which are faced with continuous loss is to improve the short-term performance quickly,but not based on the long-term development strategy.In this case,the market reaction is negative,the long-term performance of the enterprise has not been substantially improved,and it has brought effects such as the increase of business risk to the enterprise.This paper suggests that listed companies should consider various factors,pay more attention to the strategic value of divestiture,and take the initiative to choose the right time of divestiture,so that the divestiture can play a strategic significant role and promote the long-term development of enterprises.