Research On The Influence Of Institutional Investors On Enterprise Value In Debt-to-equity Swap

In recent years,as China's economic growth has slowed down,structural problems such as imbalance between market supply and demand and excess capacity in some industries have become increasingly prominent,and the overall downward pressure on the macro economy has increased.In the stage of rapid economic growth,some enterprises expand their operation and production by means of increasing leverage,which leads to excessive debt growth,high leverage ratio and excessive debt burden,which seriously affects normal production and operation of enterprises,creates potential financial risks and is not conducive to the healthy development,transformation and upgrading of social economy.Therefore,It is natural for the central government to put deleveraging on the agenda in 2015.The problem of high leverage in the iron and steel industry has a long history.Some iron and steel enterprises even fell into liquidity dilemma due to the dramatic increase in debt scale,and the debt default event subsequently developed into debt repayment difficulty,which caused widespread concern of the government,enterprises and society.Therefore,the deleveraging of the iron and steel industry is urgent.Since 2016,the central Government has successively issued documents to propose market-based debt-for-equity swap as an important means of supply-side reform,encouraging enterprises and financial institutions to carry out debt-for-equity swap in a market-based way in an orderly manner.By December 2019,debt-for-equity swaps in the steel industry had signed contracts worth more than 200 billion yuan,becoming an important way for steel companies to deleverage.The implementation of market-oriented debt-to-equity swaps will not only help enterprises to complete deleveraging tasks,but also reduce corporate financial risks and promote the improvement of corporate governance structure,thus providing a strong impetus for the long-term healthy development of enterprises.However,not all enterprises can achieve their desired goals in this way.Therefore,whether enterprises can achieve deleveraging and business transformation and upgrading through debt-equity swap,the role of institutional investors should not be ignored.To Debt-to-Equity Swap,institutional investors and enterprise value to further research,this article selects Valin iron and steel as the research object,combined with the result of event study and financial performance evaluation of the institutional investors to participate in debt convertible value creation effect is analyzed,it is concluded that Valin iron and steel after the complete market bonds convertible,most of the time the excess yields are obtained,and its profitability and development capacity will be further improved in the future,as well as the value of the enterprise.Market-oriented debt-equity swap has achieved the desired effect.On this basis,this paper further analyzes the transmission mechanism of institutional investors' influence on enterprise value in debt-equity swaps.This paper finds that: in the process of market-oriented debt-equity swap of Valin Iron and Steel,the mechanism of institutional investors' influence on enterprise value is manifested: The second is to inject high-quality assets,integrate resources to create synergistic effect,accelerate the business integration process and realize the value-added of enterprise value;Thirdly,institutional investors' participation in governance and decision-making is the premise of value creation.The participation of institutional investors in governance and decision-making is the premise of value creation.Business integration and capital structure optimization are the means and basis of value creation respectively.The income generated by business integration and capital structure optimization will affect the value creation of enterprises.Therefore,enterprises implementing debt-equity swaps can improve the enthusiasm of institutional investors to participate in corporate governance,adjust business and decision-making accordingly,make full use of the professional advantages of institutional investors,and maximize the synergistic effect.The main contributions of this paper include: first,it studies the relationship among market-oriented debt-equity swaps,institutional investors and enterprise value,and expands the research in related fields;Secondly,the agency cost are used to study how institutional investors create value for enterprises in market-oriented debt-equity swaps.Third,combined with the case further discussion debts into shares of institutional investors to participate in the motivation,value creation effect and path of action,to a certain extent,constructed to leverage,for the purpose of business integration and strategic transformation method system of the steel corporate bonds convertible debt for subsequent optimization transfer operation pattern,the promotion of debt transfer shares implementation experience provided ideas and reference.