Research On The Motivation And Performance Of Domestic Equity Carve-Out Of A Shares

Under the background of intensified market competition,most A-share enterprises in China adopt the strategy of industrial chain extension to realize diversified development.Subsequently,some enterprises have too many business segments and bloated organizational structure,which leads to problems such as inefficient use of funds,inefficient management and lack of sufficient funds to highlight the development of advantageous businesses.In order to solve the above troubles and optimize the allocation of capital,listed companies in the United States began to explore the contractile asset restructuring method of equity carve-outs as early as the 1980 s.In China,equity carve-outs appeared late,and the CSRC has always discouraged enterprises from equity carve-outs in the domestic capital market.In December 2019,the CSRC issued the latest regulations on equity carve-outs,and equity carve-outs in the domestic capital market has gradually become popular.In order to research the motivation of enterprises to choose equity carve-outs and the impacts after spin-off listing,it will provide reference for enterprises planning to spin-off their subsidiaries in A-share listing in the future.This thesis takes XTC equity carve-out from XWXN to the Science and Technology Innovation Board as a case study.Firstly,this paper reviews the spin-off,including the related background,case company,spin-off process and compliance.Then,combined with relevant theories and enterprise development,it explains the motivation of equity carve-outs;Finally,combined with the motivation of equity carve-outs,this paper comprehensively analyzes the impact of the equity carve-out,on the parent and subsidiary companies from various perspective,including the reaction of capital market,financial indicators and non-financial indicators.At the same time,this paper also analyzes the possible risks in the subsequent development of enterprises.The conclusions drawn in this article are as follows:(1)The main motivation of XTC’s equity carve-outs and listing of XWXN is to ease financing constraints,enhance enterprise valuation,focus on the development of its main business and improve management incentives.(2)The performance study of XTC after its equity carve-outs further confirms its spin-off motivation.The equity carve-outs can bring wealth effect to the company in a short time and enhance the company’s value;after listing,the financing constraints of subsidiaries have been eased and their solvency has been enhanced;the parent company has focused on the development of its core business,and its professional operation ability has been improved;the incentive of subsidiary management office has been effective,thus the efficiency of enterprise management has been improved.In addition,in terms of non-financial performance,the qualification examination in the process of listing has made related transactions between companies more standardized and corporate governance more perfect;the company’s R&D investment has increased,thus enhancing its core competitiveness;after making a lot of profits,the enterprise’s production capacity has expanded and its market share has increased.(3)After the equity carve-outs,enterprises may have the risk of poor performance in the later period,increased related transactions and decreased accounting information quality.