Research On The Impact Of Nangang's Debt-to-Equity Swap On Its Capital Structure

With economic development,the past model of relying on investment and leverage to drive rapid economic growth is difficult to continue.Excessive leverage will not only increase the financial burden of enterprises and damage the development potential of high-quality enterprises in my country,but also cause economic risks.In 2016,the State Council issued policy documents related to market-oriented debt-to-equity swaps,encouraging eligible companies to actively carry out market-oriented debt-to-equity swaps.Realizing corporate debt rationalization through debt-to-equity swaps has gradually become a hot spot.In the context of this research,this article intends to provide reference for companies that are or will implement debt-to-equity swaps through the analysis of typical cases.This article intends to select Nanjing Iron and Steel Co.,Ltd.as the research object,and through the method of combining theory and case,aims to study the impact and degree of market-oriented debt-to-equity swaps on its capital structure.The article first expounds the concepts of debt-to-equity swap and capital structure,and compares the similarities and differences between the two rounds of debt-to-equity swaps on this basis.Secondly,this article uses the case study method to analyze in detail the motivation for the implementation of the debt-to-equity swap and the implementation process of the debt-to-equity swap.Then this paper uses the financial index method to deeply analyze the changes in the actual capital structure of Nangang Steel before and after the debt-to-equity swap,and then uses the static optimal capital structure calculation formula and the entropy method to calculate the static optimum of the company before and after the debt-to-equity swap.And the dynamic optimal capital structure,and compared with the actual capital structure before and after the debt-to-equity swap,and then analyze the degree of influence of Nangang's debt-to-equity swap on its capital structure.The research found that:(1)The debt ratio of Nangang's shares decreased significantly before and after the debt-to-equity swap,and the capital structure was optimized,effectively avoiding related financial risks.(2)The gap between the actual debt ratio and the static optimal debt ratio of Nangang before the debt-to-equity swap was more than 40%.After the debt-to-equity swap,the gap between the two has narrowed significantly.In 2019,the gap between the two was only 1.35%..(3)Before the debt-to-equity swap,the company's actual asset-liability ratio was much higher than the dynamic optimal interval number.After the debt-to-equity swap,the capital structure of Nanjing Iron & Steel Co.,Ltd.optimized significantly,and the actual asset-liability ratio was basically within this range.Finally,this article summarizes some enlightenments for the successful implementation of Nangang's debt-to-equity swaps,and provides references for subsequent debt-to-equity swaps.