Science Research Management

Science Research Management ›› 2021, Vol. 42 ›› Issue (2): 77-87.

Previous Articles     Next Articles

Merger and acquisition goodwill and corporate technological innovation

Zhu Guo Yiming1, Wang Wanwan1, Ling Yun2   

  1. 1. Business School, University of International Business and Economics, Beijing 100029, China; 
    2. School of Management, Xiamen University, Xiamen 361005, Fujian, China
  • Received:2020-01-13 Revised:2020-10-01 Online:2021-02-20 Published:2021-02-23

Abstract:

At present, the overall scale of goodwill has increased in a radical way, which has also attracted the attention of regulatory authorities. Goodwill, as an intangible asset to deal with the premium of M&A, grows exponentially. According to the data of wind at the end of 2017, the total goodwill of A-share listed companies has risen to 1.3 trillion yuan, which is 290% higher than that of 333.1 billion yuan in 2014. However, the "Enterprise Accounting Standard No.18--Asset Impairment" has canceled the amortization of goodwill, and enterprises have space to independently manipulate and judge the impairment of goodwill. Much bubbles that the goodwill brings may trigger a sharp rise and fall in the market share. At the same time, the hidden risk of high premium M&A goodwill has become a "fuse" of the subsequent "thunder" risk of goodwill impairment. The "thunder" causes the stock price to plummet, and then brings the drastic fluctuation of the whole capital market. In this case, the "Accounting Supervision Tips No. 8 -- Goodwill Impairment", issued by CSRC in November 2017, focuses on the accounting regulatory risks in the follow-up measurement of goodwill. In the process of continuous occurrence of goodwill problems, we found that the proportion of goodwill in total assets is increasing day by day. The proportion of goodwill in total assets of A-share listed companies with goodwill greater than 0 was only 0.08% in 2007 but increased to 0.58% in 2017. On the one hand, the high goodwill in M&A means the buyer′s high expectations. On the other hand, it also means the buyer′s high risk. This large amount of goodwill brings great uncertainty of impairment to the enterprise′s performance and valuation and then affects the future technological innovation of the enterprise. In view of this, under the background of the strategic support of building a modern economic system, as an important part of the enterprise′s operation level, will the high level of goodwill generated in M&A affect the enterprise′s technological innovation? How does the formation of goodwill affect the enterprise′s technological innovation? The above questions need to be answered. 
    Therefore, this paper takes the A-share listed companies in Shanghai and Shenzhen from 2007 to 2017 as a sample, trying to investigate the impact of M&A goodwill on enterprise technological innovation. The empirical results show that the higher the level of asset-adjusted goodwill, the lower the level of technological innovation. The results of the intermediary mechanism test show that reducing asset turnover ratio and improving financing constraint level are important ways for goodwill to influence enterprise technological innovation. In other words, excessive goodwill level reduces enterprise technology innovation activities by reducing enterprise asset turnover ratio , occupying funds of listed companies and causing high external financing costs. 
   On the basis of the existing research, the contribution of this paper is mainly reflected in the following three aspects: First, the current literature mainly focuses on the impact of macros and micro-level factors such as the legal system, financial market, corporate financial characteristics, and governance characteristics on enterprise technological innovation. In this paper, the research on the influencing factors of enterprise technological innovation is further extended to the fields with practical economic significance, such as the goodwill of merger and acquisition. Secondly, the existing research has conducted a lot of beneficial discussions on the economic consequences of M&A goodwill, but there is a lack of research on the internal mechanism of M&A goodwill. This paper discusses the intermediary mechanism of financing constraints and asset turnover rate, and finds out the possible ways of the influence of M&A goodwill on enterprise technological innovation, which not only enriches and expands the research on M&A goodwill, but also provides a new perspective for understanding and understanding the economic consequences of M&A goodwill. Finally, the research results from the perspective of M&A goodwill show that technological innovation of enterprises is not only affected by internal management problems, but also affected by the external environment. This finding is consistent with previous research results, reflecting the characteristics of dynamic changes of enterprises, and responding to the fact that the market needs to regulate the level of goodwill, which is conducive to improving the corporate governance system and legal supervision system. It is of great significance.

Key words: merger and acquisition goodwill, corporate technological innovation, asset turnover ratio, financial constraint