Research On The Reasons And Countermeasures Of Goodwill Impairment Of Listed Company

In our country,following the fast progress of M&A market,the number and amount of M&A transactions rise continuously,which results in more and more goodwill in the consolidated statements,and large impairment happened frequently in the A-share market.The sudden "explosion" will impact the performance of listed companies,furthermore,will make investors suffer the losses.It’s vital to identify and measure the goodwill,and it cannot be ignored in the M&A activities of listed companies.Based on the above background,this paper hopes to find the main manifestations and reasons of goodwill impairment through the study of case companies,and explore how to effectively reduce the adverse impact of huge goodwill impairment on enterprises and investors.In this paper,the major studies is as below: Firstly,search for the reasons for the goodwill overvalued,from the financial condition of both sides of M&A,draw a conclusion by analyzing the impact of different assessment methods,studying the incentive of major shareholders,and searching that how the performance commitment influence the transaction price;Secondly,analyzes unreasonable points in the process of goodwill impairment,and studies the causes for accruing large impairment of goodwill.Mainly consist of there is a high appreciation in the formation of goodwill,the performance of the acquiree does not meet expectations,and the management has the motivation of "taking a big bath;Finally,come to the conclusion and propose solutions.It offers the proposal from the aspects that listed companies should improve their own internal control,investors should notice to avoid risk,relevant regulatory authorities should take charge of listed companies and intermediary agencies strictly,and optimize the manipuility of goodwill impairment test.It provides some references for the regulatory authorities in information disclosure and regulatory measures,so that investors can learn more about the goodwill information.By means of in-depth study,it comes to the conclusions.There are some problems of goodwill impairment,they mainly appeared as follows: Firstly,the management may arbitrarily accrue goodwill impairment in accounting according to its own situation;Secondly,in terms of valuation,some companies with bad motives manipulate the calculation results by using the tedious count process and some subjectivity of parameters;Thirdly,the information is not published detailedly,which makes the investors can’t acquire sufficient information of listed company.The main reasons for goodwill impairment are as below: Firstly,the equity value of the target company during M&A is overvalued,that result in the high amount of goodwill recognized,which lays a hidden risk for the later provision for huge goodwill impairment;Secondly,the target company unfinished the promised performance objectives,it shows there is a possibility of impairment of goodwill;Finally,the management has the motivation of "taking a big bath" and uses goodwill to adjust profits.By clearing up the generation and follow up accounting course of goodwill of the case,this paper studies the unreasonable points and reasons of goodwill impairment,and provide some proposals for the problems.