Goodwill is the difference between the merger cost of the buyer and the share of the fair value of the identifiable net assets of the acquired enterprise.
Since the implementation of the CSRC policy in 2014, China has seen a boom in mergers and acquisitions. Due to the goodwill in the A-share market, it has also grown by leaps and bounds in recent years. The goodwill of A-share listed companies was 328.826 billion Yuan at the end of 2014 and 1.264 trillion Yuan at the end of 2017, which doubled in several years after the issuance of the new policy of the CSRC. While the value of goodwill assets continues to accumulate, the amount of goodwill impairment also increases year by year.
Although the original intention of M&A was to optimize the allocation of resources and realize the development strategy of enterprises, the negative effects of subsequent poor performance and huge goodwill impairment caused by agency problems and information asymmetry have gradually emerged.
ESG as a non-financial comprehensive evaluation index Under the system of ESG information disclosure, investors can have a more comprehensive and three-dimensional understanding of enterprises from the aspects of environment, society, and corporate governance, which objectively reduces the information gap between investors and enterprises, helps stakeholders form a better cognitive system of enterprises, reduces the uncertain risks caused by information asymmetry, improves corporate image, and finally achieves the purpose of enhancing corporate value.
In order to achieve high-quality and sustainable development of enterprises and practice the new development concept, this paper studies the impact of goodwill impairment on enterprise value and the role of ESG performance, investors, analysts, and other stakeholders' attention from the perspectives of agency theory, information asymmetry theory, and signal theory.
This paper takes A-share non-financial listed companies with combined goodwill from 2015 to 2021 as samples, takes goodwill impairment as independent variables, analyzes the relationship between goodwill impairment and enterprise value, and explore the mediating role of ESG activities in alleviating agency problems and information asymmetry.And how investor sentiment and analyst following effect the relationship.
The research finds that: Due to the existence of information asymmetry and principal-agent problems, the goodwill impairment of enterprises have a negative impact on the enterprise value and the ESG activities. ESG comprehensive activities have a positive impact on enterprise value. From the perspective of various dimension included in ESG activities, environmental activities and social responsibility activities have a significant positive impact on enterprise value, but the governance has a positive impact on enterprise value, although it is not significant. The ESG activities of enterprises can help to reduce the information asymmetry and agency problems, play the mediator role in the relationship between goodwill impairment and enterprise value, and reduce the harm caused by goodwill. Investor sentiment and analyst following play the moderating the relationship between corporate ESG activity and corporate value. The impact of investor sentiment weakens the effect of corporate ESG activities in enhancing corporate value. Conversely, Analysts following can strengthen the effect. Considering the above factors, goodwill impairment, ESG, investor sentiment and analyst following together have a moderated mediation effect to corporate value.
This study explores the relationship between the goodwill impairment and enterprise value of China's A-share listed companies, and further brings ESG activities into the analysis framework, clarifies the role path of 'Goodwill impairment-ESG activities-Enterprise value', and clarifies the, mediator effect of enterprise ESG activities between goodwill impairment and enterprise value. At the same time, based on the influence of different information users on ESG related disclosure information, the regulatory effect of investor psychology and analyst tracking is discussed, and the differentiated impact of enterprise ESG performance on enterprise value is clarified, and the relevant research literature is enriched.