Research On The Influence Of Market-oriented Debt-to-equity Swaps On Corporate Value

As China's economy enters a new normal,industrial transformation and upgrading,the real economy is under greater pressure,some enterprises are experiencing difficulties in operation and their ability to repay loans has weakened.On October 10,2016,the State Council officially launched this round of market-based debt-to-equity swaps.This round of debt-toequity swaps is based on the basic principles of marketization and rule of law,but there are still many problems in the specific implementation of process so far.In addition to reducing the financial leverage of the company,it is more important to promote the long-term development of the company and enhance corporate value.In this context,research on the implementation mechanism of market-oriented debt-to-equity and its impact on corporate value has great research value.This article adopts the case study method and takes Zhongjin Gold Crop.,Ltd(hereinafter referred to as “Zhongjin Gold”)as the research object.Zhongjin Gold is a leading company in my country's gold industry and the only state-owned enterprise among my country's listed gold companies.The company was dragged down by its subsidiary Zhongyuan Smelter,and its debt-to-asset ratio was relatively high in the industry,and its performance was poor.In order to help its subsidiaries alleviate debt pressure and reorganize listed companies,Zhongjin Gold launched debt-to-equity swaps at the end of 2018.Then what is the operation mode of Zhongjin Gold's market-oriented debt-to-equity swap,what impact will the implementation of market-oriented debt-to-equity swap have on the value of the company,and the path through which it affects the value of the company? This is the main issue to be studied in this article.First,this article briefly introduces the company profile of Zhongjin Gold,the implementation plan and process of market-oriented debt-to-equity swap,and then analyzes the value of market-oriented debt-to-equity swap to the company from three aspects: signal transmission effect,corporate governance effect and financial effect impact.Finally,based on the above analysis,the conclusions and recommendations of this article are drawn.The research conclusions of this article:(1)Investors have a positive attitude towards Zhongjin Gold's debt-to-equity swap,which is reflected in the fact that after the market-oriented debt-to-equity swap,its cumulative A-share excess return rate is positive,and the increase in the market value of the company can bring more returns to shareholders and increase corporate value.(2)Market-oriented debt-to-equity swap can improve corporate governance by changing the company's equity structure.On the other hand,they can encourage companies to strengthen cost control,improve operating efficiency.(3)Market-oriented debt-to-equity swap can improve the financial status of enterprises.After the debt-to equity swap,the corporate financial structure improves,the scale of debt financing decreases,and the solvency is enhanced.In addition,the reduction of financial expenses and the improvement of the company's management level can enhance the profitability and operating capacity of the company,and the economic value added of the company has also been improved after the market-oriented debtto-equity swap.