Research On Failure Of Performance Commitment And Protection Of Minority Shareholders’ Rights And Interests

Mergers and acquisitions are becoming the main way for listed companies to change their operation mode,expand their business scope and enhance their market competitiveness with the rapid development of China’s market economy.Today,with the increasing number of mergers and acquisitions of listed companies,limited by the relevant legal system to be improved,regulatory punishment to be strengthened and other factors,resulting in merger failure,goodwill thunder,financial fraud and other problems are becoming more and more prominent.Under the background of the reform of non-tradable share structure,in order to urge listed companies to comply with relevant regulations and safeguard the legitimate rights and interests of small and medium-sized investors and other relevant parties,China Securities Regulatory Commission took the lead in proposing the performance commitment compensation mechanism in 2008.Signing the performance commitment agreement plays a great role in improving the efficiency of acquisition and giving play to the synergies of merger and acquisition,and can also effectively stimulate the enthusiasm of the majority of minority shareholders.However,in recent years,the merged enterprise failed to meet the forecast income standard,failed to complete the target performance commitment and other problems gradually emerged,and there were frequent incidents of major shareholders using information advantage to harm the interests of minority shareholders.All these reflect that the current performance commitment mechanism still faces many problems.In order to uphold the original intention of the mechanism to protect the rights and interests of minority shareholders,it’s particularly critical to analyze the existing problems deeply and think of solutions at this stage.In this paper,Wuyang Parking’s acquisition of Tianchen Intelligent Company in 2017 is selected as the case study object.First,on the basis of combing domestic and foreign literature on performance commitment and protection of minority shareholders’ rights and interests,combined with relevant theories such as information asymmetry,this paper analyzes the reasons for the failure of performance commitment in Wuyang Parking’s acquisition of Tianchen Intelligent Company and the behaviors affecting minority shareholders’ rights and interests during the performance commitment period.Secondly,the financial index analysis method is used to evaluate the long-term performance of Wuyang Parking before and after the merger,and analyze how the change of financial performance affects the minority shareholders’ equity.Then,the event study method is used to analyze how the failure of performance commitment affects the short-term market performance of Wuyang Parking,so as to analyze its impact on minority shareholders’ equity.Finally,the reasons for failure of performance commitment and the long-term and short-term performance after signing performance commitment are comprehensively analyzed,and the impact on the equity of minority shareholders is discussed.Based on the previous analysis,the following conclusions are drawn: Firstly,performance commitment has certain positive impact on the improvement of enterprise operation and the increase of company stock price in the short term,which promotes the realization of the maximization of the interests of shareholders including minority shareholders;Secondly,behaviors such as high premium acquisition,huge goodwill impairment and major shareholders’ reduction aggravate the risk of failure of performance commitment,resulting in the loss of corporate interests,and thus affecting the rights and interests of minority shareholders;Third,the rights and interests of minority shareholders need to be further protected by the legal system,regulatory authorities and company executives.Finally,the experience and problems in the case are summarized and the enlightenment is considered,that is,before signing the performance commitment agreement,the enterprise should fully consider the appropriate implementation environment and effective implementation of the guarantee method and other relevant factors,and ensure the smooth implementation of the performance commitment from the three stages before,during and after the signing of the performance commitment.The rights and interests of minority shareholders will be further protected.