Research On The Motivation And Economic Consequence Of Shengyi Electronic Spin-offs

Overseas diversified enterprises will shrink their scale through the listing of separated business units to eliminate the monetary strain and enhance the corporation’s performance.In 2019,the implementation of the registration system and the introduction of The Provisions on the Domestic Listing Pilot of The Subsidiaries of Listed Companies made it possible for the listing of the spin-off subsidiaries to be listed in China,and the domestic capital market has entered a new stage of spin-off and listing.In 2021,Shengyi Electronics,the spin-off subsidiary of Shengyi Technology,was listed on the SSE STAR MARKET,becoming the first enterprise to achieve "A share market to A share market" in China,which has important reference for companies to be spin-off and listed in China.This paper takes the Shengyi Technology spin-off as the research object to analyze the motivation and economic consequences of the domestic spin-off and listing companies.On the ground of this,the following work was mainly launched.First,peruse the pertinent literature of both domestic and foreign spin-offs,and apply the market-timing theory,market value management theory,management incentive theory and other theoretical analysis;Next,Combined the above theory,with the motivation of Shengyi Technology concretely,including the internal enterprise demand motivation and the external capital market motivation of the enterprise development;Once more,Using the financial index analysis method,event study method,EVA method and Tobin Q index,discuss the influence afer spin-off,from three aspects of market performance,business performance and enterprise value.Last,combined with the analysis results of the case enterprises,suggestions posed for the company,regulators and investors.This paper mainly draws the following conclusions.As for the motivation of the spin-off,the subsidiary company has a strong momentum of development,aiming to broaden the financing channels and take advantage of the equity incentive.The parent company hopes that the parent and subsidiary companies will be independent,play their respective advantages and release the enterprise value.Moreover,with the gradual improvement of the domestic capital market,the cost advantage of splitting to overseas market is gradually weakened.In line with the relevant listing indicators and company strategy,Shengyi Electronics decided to spin-off list in the domestic market.As for the economic consequences of the spin-off,Firstly,the spin-off improves the parent company’s market performance.Using the event study method,this paper finds that the abnormal return and cumulative abnormal return of selected enterprises two major events related to corporate spin-off have increased significantly.Secondly,the profitability,credit ability and operating ability of the parent and subsidiary company after the spin-off have also been improved to a certain extent.The parent-subsidiary company can make professional investment independently through multi-channel financing recording to its own development strategy,which improves the investment efficiency.The capital cost of equity financing is lower,and the overall financing efficiency of enterprises is improved.The up-down stream collaboration development of the company improves the overall operating efficiency of the enterprise;Thirdly,after comparing the overall enterprise value index before and after the spin-off listing,it is found that the spin-off listing improves the overall value of the enterprise.Based on the above conclusions,this paper throws out the following suggestions:Firstly,new systems and arrangements such as spin-off and listing,SSE STAR MARKET are both new opportunities and new challenges.When and how to spin-off reflects the wisdom of enterprise operation and determines the effect of spin-off.Enterprises should conduct spin-off based on actual demand and avoid blindly following the trend;Secondly,pay more attention to the structural risks of the company in the process of spin-off.Relevant departments should strengthen supervision,encourage enterprises to go public,and strictly control the quality of listed companies;Thirdly,investors should set up the correct investment concept and realize the integration of knowledge and practice in value investment.Considering the current higher valuation premium of the SSE STAR MARKET,such huge arbitrage space may lead to the collective irrational investment and neglect the identification and evaluation of the underlying enterprises.Therefore,investors should strengthen the judgment and screening.