Debt Restructuring,Capital Structure And Firm Performance

After the two wave of debt restructuring in China,The request of "Deleveraging"makes the debt restructuring be a hot topic in the academia and the capital market in 2015.Debt restructuring is the result of bargaining between both debtor and creditor,which starting from the perspective of the debtor.Debt restructuring can beautify the corporate financial statements of the current period,relieve the financial dilemma of enterprises and optimize capital structure.So as to enhance the enterprise value.From the point of view of the creditor,compared to the bankruptcy liquidation of debt,the way of debt restructuring can reduce the claims of sunk costs,to achieve better economic results.In general,the ways of debt restructuring include debt-to-debt,debt-to-equity swap,modification the conditions and even combination.In any way,there will change the corporate leverage ratio.Previous studies have shown that there is a target capital structure in Chinese enterprises,and enterprises want to be closer to the optimal capital structure by constantly adjusting their own capital structure.As an important way to adjust the capital structure of enterprises in financial dilemma.Debt restructuring is expected to have an impact on the speed of enterprise leverage adjustment.The research has proved that enterprises with high debt level,the reduction of the asset liability rate can bring better business performance to the enterprises.As a major adjustment to the capital structure of enterprises,debt restructuring can help enterprises get rid of financial dilemma and optimize the governance structure.Through the analysis of the financial data in China,it is found that the enterprises can use the opportunity of restructuring to achieve the double promotion of short-term and long-term performance.This paper selected 118 debt restructuring events between 2008-2013 in Shanghai and Shenzhen Listed companies,based on the theories of capital structure and corporate performance which has considered the special institutional environment in China.Through multiple linear regression analysis,combined with relating transaction characteristic variables and descriptive statistics,which proposed two hypotheses in this paper specifically.Test results are summarized as follows:(1)The debt restructuring for listed companies to provide the opportunity to adjust the existing capital structure,reduce the gap between the target debt ratio.The optimization of capital structure effect is more obvious,who is in the financial dilemma.It is very strong of using the debt restructuring opportunity to adjust the capital structure.The debt restructuring can relieve the financial dilemma of enterprises;(2)Debt restructuring could not only increase of company's financial performance this year,but also can significantly improve long-term financial performance,Which indicates that the listed companies debt restructuring behavior not only focus on short-term earnings changes,but rather focus on the improvement of enterprise performance,in order to obtain the long-term return on investment.