Research On Political Connection,Bank-Enterprise's Relation And Debt Restructuring

In recent years,with the promotion of economic globalization and the acceleration of product upgrading,fierce market competition leads to the external environment of enterprise is complex and changeable,the financial risk and management risk faced by the enterprises is increasing,the number of financial distress companies is also increasing.Theoutlet of listed companies in financial difficulty has aroused the concern of stakeholders,such as the government,creditors and investors.Generally,there are three ways to solve the financial distress of acompany:asset reorganization,bankruptcy liquidation or reorganization,and debt restructuring.When the debtor defaults on the debt,the debt restructuring is the most important way for the creditor to maximize the value of the debt.The political connection and thebank-enterprise's relation,as two important external social capital,can bring great value to companies.It has been found that the two relations are prevalent in most regions and countries.When the system environment is very backward,the two relations bring benefits to the enterprise and support the development of the enterprise to a certain extent.Then,when the listed companies are in financial distress,can the political connection and the relationship between the banks and enterprises bring benefits to the enterprises,thus affecting the realization of the debt restructuring agreement and the debt restructuring decisions of both sides of the debtcovenants?In such a "relational" social environment of our country,this paper will study the influence of political connection and bank-enterprise's relationon debt restructuring,analyze the mechanism of the tworelations on debt restructuring,discuss which relationship is more conducive to the realization of the debt restructuring agreement,and deeply analyzesingle relationship and dual relationship,which has a greater impact on debt restructuring.This paperdividesthe object ofdebt restructuring into financial creditors and non-financial creditorsaccording to the nature of the creditor's,divides the approach of debt restructuringinto informal and formaldebt restructuringin the light ofwhether creditors apply for judicial way,then studies the effect of the two relations on the occurrence of debt restructuring and the selection of restructuring object and the selection of restructuring approach.Specific research contents are as follows:Part one is the exordium.The exordiumintroduces thesetting and significance of the study,reviews the relevant literature,and expounds the research ideas,research methods and the innovation of this paper.Part two is the theoretical basis.This part firstly defines the related concepts,then expounds the theory of financial distress,the theory of debt contract,the theory of debt renegotiation,the theoryofasymmetric information,providing a theoretical basis for the latterbringing forward the hypothesis of this paper and the empirical analysis.Part three is the research hypothesis.On the basis of the second part,thispart analyzes the influence of political connection and bank-enterprise's relation,then puts forward three hypotheses about theinfluence of political connectionand bank-enterprise's relationon the occurrence of debt restructuring and the selection of restructuring object and the selection of restructuring approach.Part four is study design.This part mainly introduces the sample source,the data selection,the concept and measure of factor,theconstruction of the model.Part five is the empirical test and result analysis of the political connection,bank-enterprise's relation and the occurrence of debt restructuring.Part six is the empirical test and result analysis of the political connection,bank-enterprise's relation and the choice of debt restructuring objects.Part seven is the empirical test and result analysis of the political connection,bank-enterprise's relationand the choice of debt restructuring approach?Part eight part is the conclusion.On the basis of the above,we draw the conclusions and implications of this study,and point out the shortcomings of this study and its future prospects.On the basis oftheoretical and empirical analysis,we finally come to the conclusion.Firstly,there is a significant positive correlation between relationwhich listed companies ownedpolitical connection or bank-enterprise's relationand the occurrence of debt restructuring.In single relationship,political connections have a greater impact on debt restructuring;we also found that double relationships have more impact on debt restructuring than single relationships.Secondly,there is a significant positive correlation between relation which listed companies owned political connection or bank-enterprise's relation and the selection of financial creditors.In single relationship,it is easier for the company which owned the bank-enterprise's relation to reach a debt restructuring agreement with the financial creditors when the debt restructuring occurs;we also found that companies suffering financial distress with dual relation ships are more likely to reach debt restructuring agreements with financial creditors.Lastly,we only found companies suffering financial distress with bank-enterprise's relation are easier to reach a private debt restructuring agreement when the debt restructuring occurs.The political connection and dual relationship existing in financial distress companies are not related to the choice of private debt restructuring.Generally speaking,the relationship between banks and enterprises has more extensive influence on the debt restructuring behavior of listed companies than the political connection.There are two main points of innovation in this paper:First,the study of debt restructuring has studied the relationship between political connections and debt restructuring,the bank-enterprise's relation and private debt restructuring.Based on the detailed study of debt restructuring,this paper studies the relationship between political connections,the bank-enterprise's relation and the occurrence of debt restructuring,the choice of the type of creditors to restructure,the choice of ways to restructure.Second,previous some literature studied the influence of political connection and bank-enterprise's relation on debt financing(bank loans)and the recovery of companies suffering financial distress,also studied whether dual relationship shave greater impact than only one relationship,but there is no study focusing on the relationship between political connections,bank-enterprise's relation and debt restructuring at the same time.This paper simultaneously studies the influence of political connections and bank-enterprise's relation on the debt restructuring,pays attention to which relationship is more important,and whether the dual relationships have greater influence than one relationship.