Research On The Causes Of Goodwill Impairment Of Company S And Its Risk Prevention

With the steady development of the capital market,mergers and acquisitions(M&A)of listed enterprises are becoming more and more frequent.In order to quickly occupy the market and realize strategic transformation,many enterprises have carried out highpremium M&A many times,which leads to accumulating a large amount of goodwill.However,in recent years,the "thunder explosion" of goodwill occurred frequently,and the huge amount of the goodwill impairment induced bad impact to the capital market.Therefore,the recognition of goodwill and the impairment of goodwill have become important issues that cannot be ignored in the merger and reorganization activities.In order to prevent the impairment of goodwill,this thesis focuses on the case of S company merging with B company.From the perspective of M&A valuation,this thesis analyzes the causes,economic consequences and risk prevention strategies of goodwill impairment.The main research contents include: Firstly,through literature research and case analysis,the essence,formation,impairment and risk prevention of goodwill are summarized;Secondly,through analysis of the financial data of S and B companies,this thesis researches the process of M&A.The value added rate of S enterprise in this M&A is up to 2907%,and the ROE is up to 447%.The large difference and valuation before and after PB M&A leads to the hidden danger of goodwill impairment risk;Finally,through the research on valuation method,performance commitment and market reaction,this thesis systematically analyzes the causes and economic consequences of huge goodwill impairment after the high premium M&A of S enterprise,and puts forward corresponding strategies and suggestions for preventing goodwill impairment and strengthening goodwill management.Through the in-depth analysis of the case,the following conclusions are drawn.Firstly,the influencing factors of the high-premium M&A mainly include insufficient due diligence on the target enterprise before the M&A,unreasonable M&A consideration,excessive reliance on the “gambling” mechanism and incomplete information disclosure.Secondly,influencing factors mainly include the "change of face" of performance commitments,the existence of earnings management,the interest transfer of major shareholders and the reduction of actual controllers to cash out.Thirdly,the risk analysis of huge goodwill impairment mainly include short-term market reactions,deterioration of financial performance and damage the interests of small and medium shareholders.Fourthly,the countermeasures to prevent the risk of goodwill impairment mainly include investors’ prudent investment decisions,enterprises’ improvement of internal governance,regulatory authorities’ improvement of information disclosure requirements,intermediary agencies’ implementation of accounting standards,etc.The research in this thesis is helpful to regulate enterprise’s M&A,reducing the risk of goodwill,strengthen corporate supervision and safeguard the interests of small and medium shareholders.It is of great significance to promote the healthy and sustainable development of listed enterprises.