Analysis Of The Influence Factors Of Debt Restructuring And The Effects On Corporate Performance

When a company confronts the difficulties to repay the huge debt, the company often have two options to get rid of the financial difficulties:(1) announce bankruptcy and enter a complicated bankruptcy liquidation proceeding;(2) consult with creditors as far as possible, then to execute debt restructuring. Taking the cost problem into account, many companies choose debt restructuring. In recent years, with the continuous improvement of Chinese capital market, the cases of the debt restructuring of Chinese listed companies showing a constantly increasing trend. Affected by the financial crisis, Chinese debt restructuring companies increased dramatically since2007. There is only1case in1998, there are15cases in2003and there are68cases in2008.Listed companies’debt restructuring not only influenced by the external financial environment, but also influenced by its internal factors. Two aspects will be researched in this paper:which internal factors affect the company’s debt restructuring and whether the companies improve the corporate performance after debt restructuring. In this paper, we choose the debt restructuring listed companies excluding the financial and insurance industries companies, those companies whose data are not complete and have singular value and those companies whose audit opinion are negative or those are refused to give audit opinion during the debt restructuring year and the year before. On this basis, we first do a comparative study between the debt restructuring companies and the non-debt restructuring companies which come from the same industries with the debt restructuring companies and whose scales are similar to the debt restructuring companies on the operation capacity, profitability, solvency, governance structure and regulatory policy in order to arrive at a conclusion that there are differences on these five factors. Then, we analyze the changes of the corporate performance before and after the debt restructuring of these debt restructuring companies in order to arrive at a conclusion that whether the debt restructuring improves the debt restructuring companies’corporate performance effectively. In this paper, the influence factors of debt restructuring and the effects on corporate performance will be analyzed theoretically and empirically.In this paper, on the basis of the operation capacity, the profitability, solvency, governance structure and regulatory policy, we do the theoretical analysis and empirical research on the debt restructuring companies, we come to the conclusion that the worse the operation capacity is or the longer the listed ages are, the more probability to occur debt restructuring and these debt restructuring of the listed companies in China do not effectively improve these companies’ corporate performance.