The Performance Study Of Reorganization In Listed Iron And Steel Companies Based On The Performance Prism:a Case Study Of Hebei Iron And Steel Company’s Reorganization

Although the production of the iron and steel industry in China is huge, the structural overcapacity, low capacity utilization, low industrial concentration and other problems has plagued the industry for a long time. In order to stop the evident decline of performance in market, iron and steel companies in China choose to follow the guidance of the government and try to eliminate excess capacity, improve market competitiveness and focus production through the asset restructuring. Many steel companies have planed or are planning to do asset restructuring.However, after a period of industrial restructuring, the performance of China’s iron and steel industry can not reach the aims mentioned in the planning of steel industry. For example, in2009five Iron and Steel Groups, including Hebei Iron and Steel, Wuhan Iron and Steel, Baoshan Iron and Steel, Jiangsu Sha Steel, Anshan Iron and Steel only product29%of the total production of in China. The positive role of the asset restructuring seems did not work smoothly in China’s iron and steel industry. Therefore, how to properly evaluate the performance of the asset restructuring, improve the performance of the asset restructuring and really complete the improvement of China’s iron and steel enterprises are still a problem worthy of study.This paper studies the performance of asset restructuring evens in China’s Iron and Steel industry through the brief description the asset restructuring evens happened in China’s iron and steel industry and the case study using DEA and performance prism. The main purpose of this paper is to value the performance of reorganization in China’s iron and steel industry.This paper includes the following sections:The first chapter is introduction. This chapter focuses on the research background and significance of this paper. Then in order to help the readers to understand of this paper easier, this chapter briefly combings the thought, main methods used and the structural framework.The second part is literature review. Through statistics of asset restructuring researches, writer notices that the researches about the performance of the asset restructuring in iron and steel enterprises is quite limited. Writer reviews the literature about definition of assets reorganization and researches of asset restructuring’s performance based on the market data, corporate history accounting information, EVA, DEA, Performance prismatic and other emerging research methods.The third chapter is theory analysis of asset restructuring’s performance evaluation. This part elaborates the central idea and the main content of asset restructuring’s performance evaluation method including the DEA method and performance prism method. Then this chapter discusses the related theory, including the principal-agent theory, agency costs theory and contingency theory. The principal-agent theory and agency costs theory shows the importance of performance study of asset restructuring. At the same time, according to contingency theory, management needs to change with the change of environment. The performance evaluation should be carried out according to the specific environment of the enterprise.The fourth chapter of this paper is the analysis of asset restructuring’s situation in Iron and Steel industry. Through statistical analysis of strength and means of asset reorganization in domestic steel enterprises, writer finds that asset restructuring in the Iron and Steel industry happens more frequently in recent years. In addition, writer analyzes the principal motivation of the asset restructuring in Iron and Steel industry and believes that the government’s guidance and synergistic effect are the major reasons of the asset reorganization.The fifth chapter is the core of this paper which is case study of the Hebei Iron and Steel’s asset reorganization. Through the analysis of the basic situation of Hebei Iron and Steel’s asset restructuring, writer finds that the asset reorganization of Hebei Iron and Steel belongs to the integrity merger within same group. Then writer analyzes the details of asset restructuring’s performance in Hebei Iron and Steel using the DEA and performance prism method and finds that the overall performance of the Hebei Iron and Steel is worse after the reorganization of assets. The last chapter of this paper is summary and outlook. Through the case study, writer notices that Hebei Iron and Steel performed worse in the terms of the contribution of stakeholders and organizational ability which lead to the decline of stakeholder’s satisfaction.Based on the detail case study and the normative research above, writer finds that reorganization of assets event did not improve the overall performance of the Hebei Iron and Steel, which means the hope of ’1+1+1>3’ has not achieved and the asset restructuring is with bad performance. In terms of all indicators expressed in the performance prism, expect for four performance indicators which is waiting for further study and one performance indicator which is proved to be the same with before restructuring, there are totally9performance indicators to be optimized, and10performance level indicators have been showed that the performance is worse than before. The performance about the contribution of shareholders, staffs and the government in Hebei Iron and Steel after the asset restructuring is worse than the performance before the asset restructuring. And the organizational capacity considered at the point of shareholders, creditors, staffs and government also declined after the asset restructuring in Hebei Iron and Steel. As a result, the performance of Hebei Iron and Steel can not meet the interest of shareholders, creditors and government and lose their faith.In total, the performance the contribution of stakeholders and organizational skills in Hebei Iron and Steel after the reorganization of the assets have been declined, which lead to the reducing of stakeholder’s satisfaction and form a vicious cycle.The first limitation of this paper is the limitations of information disclosure in corporate. The performance prism method used in this paper is not perfect, especially on the client side. Second limitation is the limitation of performance prism method when it is applied.In actually, the complex indicator in this method makes it not easy to put into use.The main contribution of this paper shows is trying to use DEA and performance prism to study special case, considering the actual application of these two methods is little. This paper breaks the limitations of the literatures which are focused on the theoretical study and writer designs a basic integrity system of performance system in the Iron and Steel industry.