Research On Value Creation Of Spin-off Of A-share Listed Companies

With the gradual maturity of China’s capital market,many listed companies disperse risks through diversified development,but the expansion of company scale and the increase of business segments hinder the development of emerging industries and produce negative synergy.As a contractive asset operation mode,spin-off can effectively break through the development bottleneck and become a choice for large listed companies to realize value recreation.Existing studies have found that spin-off can achieve short-term positive market effect and long-term value-added,but there are few relevant case studies in China.Under the background of the promulgation of Several Provisions on the pilot domestic listing of subsidiaries of listed companies(hereinafter referred to as "Several Provisions")on December 13,2019,based on the development reality of China’s A-share listed companies’ spin-off,this thesis explores the root causes of the change of company value after spin-off,and gives targeted and operable policy suggestions.Shengyi technology Co.Ltd is the first company to successfully spin off its subsidiaries to A-share listing after the introduction of the new regulations.Its experience provides a perspective for this thesis to study the value creation effect of spin-off of A-share listed companies.Based on the theoretical basis and value creation index of spin-off,this thesis first introduces the implementation process of spin-off,and finds that the main purpose of spin-off of Shengyi technology is to broaden the financing channels of its subsidiaries to enhance its core competitiveness.Secondly,through the realization of stock excess return,the change of value creation index and principal component analysis before and after the spin off of Shengyi technology,it is confirmed that the value creation ability of Shengyi technology has been improved after the spin-off.Thirdly,from the perspective of Shengyi electronics,this thesis analyzes the value creation path of spin-off from the perspective of financing effect,governance effect and management effect;Finally,draw a conclusion according to the case analysis,and give targeted opinions combined with the current practice of spin-off in China.The main conclusions of this thesis are as follows: first,spin-off has created positive market value and enterprise value,the stock market has a positive response in the short term,and the financial and non-financial indicators have been significantly improved in the medium and long term.Second,spin-off has broadened the financing channels of subsidiaries.Subsidiaries obtain a large amount of equity financing for new project construction on the first day of listing.In the future,they can also obtain growth funds through additional issuance and allotment of shares to alleviate the problem of insufficient funds.Third,spin-off can stimulate the management of subsidiaries through equity incentive means.At the same time,the participation of external supervision can improve the level of corporate governance,optimize investment decisions and stimulate endogenous growth momentum.Fourth,through the spin-off of the subsidiaries of listed companies,it will help the parent company integrate the business sector and help the parent and subsidiaries realize professional operation,so as to enhance the core competitiveness.In this case,due to the long construction period of Shengyi Electronic,the improvement of business effect has not been realized for the time being.The marginal contributions of this thesis are as follows: first,this thesis selects the first successful case of "A splits A" in China’s capital market for analysis,and its successful experience has important reference significance for other A-share listed companies that intend to split their subsidiaries into domestic listing.The second is to quantify the changes of the company’s value before and after the spin-off,and use the principal component analysis method to study the changes of relevant indicators.This thesis deeply explore the ways of value creation,focusing on how the spin-off event creates value for company from the financing effect,governance effect and business effect.The deficiency of this thesis is that the observation window after spin-off in this case is short,so it is impossible to make a long-term analysis of the value creation effect of spin-off.