Research On The Path And Consequences Of Deleveraging In Steel Industry

Under the background of economic globalization,the 2008 US subprime mortgage crisis involved the whole world,and the economic depression in various countries gradually spread.In steel industry of China,demand is shrinking and overcapacity is becoming more and more prominent.In order to maintain the operation,the iron and steel enterprises began large-scale debt financing,and the leverage ratio of the whole industry continued to rise.At the same time,the important role of steel companies in the national economy also makes it urgent for steel companies to deleverage.At present,iron and steel enterprises are actively responding to the"de-leveraging" related policies.Many iron and steel enterprises have achieved initial results in reducing their debt ratios,but some of them have not reached a reasonable level.Based on the reality,this paper puts forward the problem of deleveraging in iron and steel enterprises,and studies the following two problems:(1)How to deleverage in iron and steel enterprises?(2)Can deleveraging achieve the result of increasing the value of the company?Firstly,the concept of leverage is defined,which shows that the enterprises whose asset liability ratio is higher than 60%are considered as high leverage in this paper.Then,through literature reading,we can understand the causes of the formation of high leverage and the harm of high leverage in iron and steel enterprises,and then summarize the existing ways and consequences of deleveraging.At present,the path of deleveraging is only analyzed in theory,and the implementation of specific enterprises has not been further explored.At the same time,the research on the consequences of deleveraging in this period is also very lacking.This paper uses the method of single case study to sort out the path and influence of the deleveraging based on the deleveraging of Nangang,and analyzes the consequences of the deleveraging by using the event study method and financial performance analysis method.Through a series of analysis,summed up the successful experience of deleveraging of Nanjing Iron and Steel Co.,Ltd.,to provide reference for other enterprises.In the case analysis part,based on the capital structure theory,corporate governance theory,enterprise value theory and other related theories,this paper introduces the basic situation and high leverage situation of Nangang.Secondly,based on the modern capital structure theory and corporate governance theory,it analyzes a series of measures of Nangang in the process of deleveraging from two ways of negative and positive deleveraging,and answers the questions of Nangang Finally,we use event analysis and financial performance analysis to analyze the impact of deleveraging on company value.This paper draws the following conclusions:(1)Under the promotion of policy,the deleveraging of iron and steel enterprises has achieved some results,but there is still a long way to go from the target,and the deleveraging of iron and steel enterprises is still a long way to go.(2)Only according to the actual situation of the company,and then choose the combination of negative and positive path,can we finally ensure the effective reduction of leverage ratio.(3)From the two quantitative perspectives of short-term market reaction and financial performance analysis,deleveraging can improve the value of the company.Nanjing Iron and Steel Co.,Ltd.is a listed company with remarkable deleveraging effect in China’s iron and steel industry at present.Its successful experience has certain reference significance.In this paper,the supply side structural reform as the background,a comprehensive analysis of Nangang through a variety of deleveraging paths to resolve the debt crisis and get rid of financial difficulties,from the perspective of corporate performance to study the consequences of corporate deleveraging,through the above analysis in order to provide reference value for the subsequent deleveraging of steel enterprises.