Research On The Causes And Impacts Of Private Enterprise Bond Defaults In Shandong Province

In recent years,a large number of private-owned companies in Shandong province have fallen into financial difficulties,many of them are large scaled enterprise in local economy.The private-owned companies contribute nearly half of the Gross Domestic Product(GDP)in Shandong,and play even more important role in employment,social innovation,tax income.In February 2017,Shandong Tianxin Group,who is named as Top 500 private-owned companies in China,have gone bankrupt,follow by Qixing Group,another large private-owned company in Shandong.From November 2018 to March 2019,more Top 500 private-owned companies Shandong Jinmao Group,Dahai Group,Dongchen Group and Shengtong Group all have their debentures defaulted.Why those large scale private-owned companies in Shandong have suddenly fallen into financial difficulties,and even gone bankrupt? For the defaulted debentures,how the capital market react? This article have a case study on the Xiwang Group,and searched for the possible reasons to the above questions.External factors such as Macro-economy,District Development,Industry economies certainly have significant influence,however according to Xiwang Group's Annual reports,official announcement,Prospectus etc,this article focus on the discussion of the influence of mutual guarantee within an areas and Cross-border M&A.This article try to discuss the difficulties that private-owned companies in Shandong have faced in common.Academic studies have already had many theoretical and quantitative research and analysis on debenture default,mutual guarantee risk,Cross-border M&A risk.This paper try to further analyze the reasons that many private-owned companies in Shandong have faced in common,and give some suggestions and solutions.The main conclusions of this paper are as follows: Firstly,the main reason that private-owned companies in Shandong have serious debenture defaults is industry structure,low value added industry,over debt financing,weak in risk control.Secondly,many private-owned companies in Shandong have involved mutual guarantee,which have high guarantee risks,if the guarantee circle is generated,all the companies involved have their refinancing ability weakened,and led to crisis.Thirdly,Cross-border M&A risk should be prudent,avoid over debt financing.The study material for this article mostly come from Xiwang Group's disclosure,official information of public listed companies.Yet,there are often many complex reasons that could cause the financial difficulties for the private-owned companies.The author of this article has not managed to investigate on the site in person,therefore,the inside information related to this case study is not collected.Meanwhile,after Xiwang Group's debenture default,there is no further substantial treatment disclosed,and other companies in bankruptcy still not yet complete.Therefore,this article may be lack of depth in research due to the above reasons.