Research On The Motivation And Economic Consequences Of Spin Off

With the rapid development of our economy,listed companies find that mergers and acquisitions have a negative impact due to their own inadequacies,leading to an increase in spin-offs in our capital market.Prior to 2019,there were few cases of spin-offs and listings due to a lack of policy support.However,they are now welcomed by China’s capital markets.Thus,in the current business environment,it is worth to explore the motivation and the economic consequences of spin-off listings for listed companies.Based on the information asymmetry theory,management incentive theory,financing demand theory,business concentration strategy theory and capital market motivation,this paper introduces the concepts,types and mode of spin-offs.This paper summarizes the developing process,the current situation of Chinese listed companies,and the motivations for their spin-offs.The economic consequences are defined and the evaluation index system is designed.In addition,this paper defines economic consequences,creates an evaluation index system,and studies the motivation and economic consequences of the spin-off and listing of BCHT.These evaluations cover the corporate market reaction,financial performance,and operating effects,as well as earnings management.The results indicate that spin-offs and listings have a positive impact on market performance,financial performance,operating effect,and earnings management to both Parent and Subsidiary Companies.This paper’s analysis of the spin-off listing of BCHT enriches the domestic research on spin-off listings in theory and provides spin-off references for pharmaceutical companies that intend to spin-off in a practical sense.