Research On The Performance Of Asset Divestiture Of Listed Companies In Financial Dilemma

Agriculture is the foundation of the country,and planting is the priority of agriculture.Seed is not only the chip and the first factor of agricultural,but also the important part of our country’s food security.Listed seed companies are the representatives of outstanding enterprises in Chinese seed industry,and also an important part of the capital market.Only seed companies with excellent comprehensive strength and good development potential can obtain listing qualification.However,China’s seed industry market is affected by foreign enterprises’ monopoly,varieties blowout and policy changes.Domestic seed industry companies are facing survival challenges,fierce market competition,and even some listed seed industry companies are facing delisting crisis.As one of the implementation means of enterprise’s austerity development strategy,Asset divestiture is a way of asset reorganization.Useing asset divestiture is an effective way for listed companies in financial dilemma to avoid delisting,revitalize existing assets,further optimize industrial structure and rationally allocate market resources.Thus,it is of great practical significance to study the divestiture of listed companies in financial dilemma by taking the divestiture event as a separate research subject.In this paper,DUNHUAN SEED is selected as the case enterprise,which is unfortunately in financial dilemma and implemented delisting risk warning by CSRC in 2020.This paper systematically analyzes the background,the situation of financial dilemma,motivation and economic effects of asset divestiture in DUNHUAN SEED.Firstly,the event study method is used to calculate the excess return rate and accumulated excess return rate of DUNHUAN SEED 10 days before and after asset divestiture and 90 days after asset divestiture to reflect the change of its market performance,and the research results of negative short-term market reaction and positive long-term market reaction of asset divestiture in DUNHUAN SEED are obtained.Secondly,the financial performance of asset divestiture of DUNHUAN SEED is compared horizontally and vertically by using the financial index analysis method.It is concluded that its profitability and solvency have been significantly improved in the short term after the asset divestiture,and its development ability has also been improved,which to some extent indicates that DUNHUAN SEED has gone through financial dilemma and turned losses into profits without delisting.But from the perspective of learning and growth,the asset divestiture of DUNHUAN SEED has no obvious change on the non-financial performance.Finally,through this paper’s analysis and summary of DUNHUAN SEED,the conclusion of this paper is drawn,and three suggestions are put forward for enterprises to use asset divestiture more effectively.Hope to provide reference for enterprises in the same situation to implement asset divestiture.