Research On Goodwill Impairment Based On High Performance Commitment

In the past few years,under the background of the deepening of my country’s market economic system reform,mergers and acquisitions in various industries in China have increased significantly,the scale of mergers and acquisitions has expanded,the total amount of mergers and acquisitions has increased,and the phenomenon of high premiums in mergers and acquisitions has emerged one after another.As a result,the total amount of goodwill accumulated by companies through mergers and acquisitions has also continued to rise.In order to deal with the risk of significant impairment of goodwill after mergers and acquisitions,the performance commitment system has been introduced into the transaction market and has been widely used.The purpose of signing a performance commitment agreement in a transaction is to reduce the distortion of transaction prices due to information asymmetry,but this system faces many challenges in actual implementation.If the commitment cannot be fulfilled,it will face the risk of huge impairment of goodwill.Based on the above situation,in recent years,academic circles have turned their research focus to performance commitment and goodwill impairment,and many scholars have tried to explore the relationship between the two through qualitative or quantitative analysis.This paper analyzes the case of Huawen media’s acquisition of palm TV Yitong,studies the goodwill impairment under high performance commitment,and puts forward targeted suggestions on the setting of performance commitment terms.Before the merger and acquisition,in order to attract the attention of investors and highlight the value of the acquired company,under the joint action of high performance commitment and income method valuation,Huawen media was full of confidence in the expected profitability and development ability of palm vision Yitong in the future,which gave birth to overvalued value and buried hidden dangers for the large provision of goodwill impairment in the future;During the performance commitment period,the enterprise manipulated the performance by means of earnings management according to its own interests,promoted the accurate performance to meet the standard,and covered up the crisis of goodwill impairment;After the commitment period,due to the imperfect information disclosure,the lagging characteristics of goodwill impairment appear,the performance "changes face",and the enterprise makes a substantial provision for goodwill impairment.Huge goodwill impairment makes Huawen media show poor business performance,which has an adverse impact on the capital structure,development ability and cash flow of the enterprise,and increases the debt repayment pressure of the enterprise.Therefore,it is necessary to make the following improvements to the performance commitment terms of Huawen Media:before the merger,increase the proportion of the total performance commitment in the evaluation premium;during the commitment period,set up comprehensive assessment indicators to reduce corporate earnings management behavior;after the merger,extend the performance commitment Term,to deal with the lag of goodwill impairment.