Research On The Motivation And Impact Of Financial Performance On The Termination Of Performance Compensation Commitments

In recent years,in the process of the government’s promotion of mixed ownership reform,mergers and acquisitions are the one of the most popular activities.This refers to a simple and direct method of merging resources,which not only brings a lot of benefits to many enterprises,but also brings certain dangers to them.Therefore,in order to avoid these possible problems in the future,to promote the success of the transaction,both parties often choose to use a performance compensation commitment agreement.However,there are also some loopholes in this agreement,which may lead to the failure of the performance compensation commitment,this can affect the future business.At last many companies have terminated their performance compensation commitments in order to stop losses in a timely manner.The reasons behind this and the impact on financial performance have caused extensive research by many outstanding scholars.This paper first classifies and summarizes the existing domestic and foreign related literature,and introduces the relevant concepts of the termination of performance compensation commitments and the performance compensation commitment system.Secondly,sort out the merger and acquisition process of Rapoo Technology’s acquisition of Lehui Tianxia;then expound the formulation and implementation of the performance commitment and compensation plan of Rapoo Technology’s acquisition of Lehui Tianxia;then look for Rapoo Technology to terminate the performance compensation commitment Reasons for the agreement,and conduct financial research on the termination of the performance compensation commitment agreement by Rapoo Technology.Based on the theory of information mismatch,signal transmission and other theories,through literature reading and case studies,there are multiple reasons for the company to terminate its performance compensation commitment,which can be divided into external reasons and its own reasons.The main external reasons are the rapid changes in the industry and the unprofessionalism of external agencies.The main internal reasons are that the strength of the acquisition target is not competitive,it is not in line with the company’s future strategic plan,to prevent the goodwill from changing again,and the valuation method of corporate assets is inappropriate.The above scenarios may cause problems in corporate operations,and then terminate performance compensation promise.This kind of behavior not only has a certain promotion effect on its finances,but also in terms of long-term market reaction,it is also conducive to the improvement of stock price.It summarizes and gives suggestions,hoping to provide reference and thinking for enterprises that sign performance commitment agreements,and promote the development of the M&A market.