China Economic Review: Consolidate Asset Evaluation Gatekeeper Responsibility Intermediary | Industry | Assets
In the operation of market economy, especially in the development of capital market, some professional intermediary institutions play the role of "gatekeepers". In addition to accounting firms and credit rating agencies that are more familiar to society, asset appraisal agencies are also an indispensable and important force. The latest data shows that from 2016 to 2022, the number of asset appraisal institutions in China has increased from 3300 to 5500, the number of practicing asset appraisers has increased from 34000 to 43000, and the total revenue of the asset appraisal industry has increased from 11.9 billion yuan to 29.2 billion yuan, with an average annual growth rate of over 19%. The industry is showing a good development trend.
In order for market transactions to proceed smoothly, it is often necessary to evaluate and estimate real estate, movable property, intangible assets, enterprise value, asset losses, etc., that is, asset evaluation. In activities such as mergers and acquisitions, restructuring, and equity transactions, the use of asset evaluation becomes a core link. Asset evaluation plays an important role in maintaining market order, protecting the rights and interests of asset owners and investors, and promoting market optimization of resource allocation by leveraging the functions of value discovery and value measurement.
Without rules, there is no square. In December 2016, the Asset Appraisal Law was promulgated and implemented, along with a series of departmental regulations and industry self-discipline guidelines subsequently issued. The development of the asset appraisal industry has embarked on a path of rule of law and standardization. In recent years, the increase in the number of institutions and practitioners, as well as the total industry revenue, reflects the rapid development of the asset appraisal industry. With the expansion of market service fields and the continuous expansion of industry scale, how to achieve high-quality development in the asset appraisal industry has become an important and urgent issue.
The development of the asset appraisal industry is facing important opportunities. Asset appraisal is the "gatekeeper" of the capital market. In the context of implementing a comprehensive registration system for stock issuance, the market space of the asset appraisal industry is further expanded, which can fully leverage the professional valuation and pricing function and better serve the healthy development of the capital market. In deepening the reform of state-owned enterprises and promoting the development of mixed ownership economy, objective and scientific evaluation of assets is carried out to promote the orderly circulation of state-owned assets and prevent the loss of state-owned assets. It is worth noting that a series of new industries and formats in the market, such as data assets, ecological products, carbon products, intellectual property, cultural assets, etc., have brought new "blue oceans" to the asset appraisal industry. For example, in intellectual property pledge financing, it is necessary to smoothly transform "intellectual property" into "assets", and asset evaluation has great potential. In addition, asset evaluation plays an important role in important areas such as government debt, budget performance management, revitalizing state-owned assets, and preventing and resolving financial risks.
The development of the asset appraisal industry must be standardized and orderly. Despite continuous strict supervision by relevant departments, some of the problems that have arisen in the asset appraisal industry cannot be underestimated. At the end of last year, the Ministry of Finance issued a notice indicating that there were still some issues with the internal governance, professional competence, quality control system, and project practice quality of the inspected securities evaluation institutions. The primary task of asset evaluation institutions is to truly reflect the actual value and asset status of enterprises. In the handling of punishment cases by the China Securities Regulatory Commission, issues such as using pre-set values as evaluation conclusions, incorrect calculation of important parameters, and false records in evaluation reports are involved. Such hasty and fraudulent behavior cannot fulfill the responsibility of being a "gatekeeper" in maintaining market order and protecting the rights and interests of asset owners and investors.
To achieve high-quality development in the asset appraisal industry, it is necessary to strengthen the responsibility of appraisal institutions and strictly prevent them from changing from "gatekeepers" to "gatekeepers" and "tools". On the basis of improving institutional construction, the asset appraisal industry should continue to strengthen administrative supervision and self-discipline, especially increasing law enforcement inspections, severely punishing behaviors such as major violations of evaluations and issuing false reports, maintaining a high-pressure situation of "strict supervision and zero tolerance", continuously regulating industry order, and promoting healthy development of the industry. Evaluation institutions and their evaluation professionals should effectively abide by laws, administrative regulations, and evaluation criteria, and adhere to the principles of independence, objectivity, and impartiality.
If there is faith, it stands; if there is no faith, it is abolished. Only by taking integrity as the cornerstone, continuously improving credibility, enhancing professional service capabilities and levels, can the asset appraisal industry better fulfill its "gatekeeper" responsibilities and further demonstrate its skills in the market economy.
