Research On The Causes Of Financial Distress And Countermeasures Of State-owned Enterprises

In recent years,as China’s economic development has entered a new normal stage,traditional industries have fallen into the dilemma of low-end overcapacity,which has spawned a large number of financially distressed enterprises,including many state-owned enterprises.As the "mother of industry" of China,machine tool is closely related to the healthy development of China’s equipment manufacturing industry.However,since 2012,China’s machine tool industry as a whole has entered a downward channel,and Shenyang Machine Tool,a leading state-owned enterprise among the listed companies in the machine tool industry,began to fall into financial distress.On the basis of Principal-agent theory and Trade-off theory,this paper used case study,literature research,and comparative analysis to study the financial distress of Shenyang Machine Tool and found that it was in financial distress from 2012 to 2018,which was manifested in insufficient solvency,poor profitability and deteriorating cash flow.During this period,the enterprise took four kinds of restructuring measures to save itself,but the ultimate solution failed.Therefore,this paper analyzes the causes of financial distress of Shenyang Machine Tool into internal and external factors,internal factors are divided into two stages for discussion.First of all,the external causes for the financial distress of Shenyang Machine Tool mainly include the macroeconomic downturn,the transformation of industrial demand and the policy burden borne by enterprises.Secondly,in terms of internal reasons,from 2012 to 2016,the financial distress of enterprises are mainly caused by imperfect corporate governance structure,wrong investment decisions,poor management and single financing channels.The main reason for the failure of solving the problem of Shenyang Machine Tool in 2017-2018 is the solution which is lack in marketization,leading the early stage reasons of financial distress have not been fundamentally eliminated,and the enterprise has been in financial distress for as long as 7 years.Finally,on the basis of making clear the causes of Shenyang Machine Tool’s financial distress and learning the lessons of the countermeasures’ failure,the paper puts forward some suggestions,hoping to help it get out of the financial distress as soon as possible.