The Research On The Goodwill Impairment Motivation And Economic Consequences Of XK Company’s High Premium Merger And Acquisition Of QZ Company

With the sustained rise of social economy and the active guidance of government policies,plenty of enterprises choose to expand the scale of enterprises and enhance their strength by means of M & A.The high price paid by the acquirer often produces goodwill by M & A,whose impairment will be affected by subjective factors.Goodwill impairment cannot be reversed once it is withdrawn,so the large amount of goodwill impairment has attracted sustained and extensive attention in the capital market.XK company,as a listed company in the intelligent equipment manufacturing industry,withdrew a large amount of goodwill impairment provision for its subsidiary QZ company in 2020,which led to a tremendous change of the company’s performance and profit.Starting with the company’s M & A transactions,this paper analyzes the process of XK company M & A QZ company with high premium in detail.Motivation of high premium M & A and goodwill impairment are split by the event analysis method,this article finds that M & A valuation,performance commitment and earnings management are the main motivation.Because the motivation leads to the poor economic performance of XK company directly or indirectly,this paper explores the market response of goodwill impairment through event research method and the impact of goodwill impairment on financial performance through financial analysis method.Finally,it puts forward suggestions and conclusions to stakeholders in the chronological order before M & A,after M& A and after goodwill impairment.This paper holds that:during M & A,we should adopt diversified evaluation methods to evaluate the target enterprise,make rational M & A and formulate prudent performance commitment.Innovative performance commitments can be adopted to provide hierarchical incentives or punitive damages;After M &A,acquirer should try to achieve the synergistic effect and reduce the possibility of business deterioration,strengthen internal supervision to find and avoid the possible risk of goodwill impairment timely;After the impairment of goodwill,the enterprise should learn from the experience of the goodwill impairment event,summarize the mistakes and deficiencies to avoid the same loss in the next M & A.