| Since the financial crisis in 2008,China’s commodity market has continued to slump.The important reason is that a large number of enterprises are financially risky due to debt pressure,lack of cash flow,and it is difficult to transform and upgrade in the short term.In this context,market-oriented debt-to-equity swaps were proposed as one of the measures of"supply-side reform".Changhang Phoenix is a typical enterprise in China that has fallen into financial risk due to cyclical factors in the industry.However,ChangHang has been a leading enterprise in China’s shipping industry and still has core competitiveness.Changhang Phoenix has continued to shrink its operating income due to the industry’s continued downturn.At the same time,due to the blind expansion of the previous period,the debt is high,and it carries a large amount of operating costs.Therefore,Changhang gradually fell into serious financial risks.In this state,Changhang’s net profit for three consecutive fiscal years from 2011 to 2013 was negative,and the net assets at the end of 2012 and 2013 were negative.It was suspended on May 16,2014.In order to restore the normal operation capability of Changhang and avoid delisting,the management has carried out a large number of layoffs and asset sales to reduce costs,but it cannot change the operational dilemma and financial risks of Changhang.After the negotiation,2014 Changhang began to implement the debt-to-equity swap program and completed it at the end of the year.After the implementation of the debt-to-equity swap,Changhang not only got rid of serious financial risks,but also made the net profit and net assets positive,resumed the listing qualification,and has been operating normally in the A-share market.This paper takes Changhang Phoenix Debt-to-Equity swap as the research object.It summarizes the literature on the applicability of financial risk by combing the motivation,implementation effect,impact of debt-to-equity swap on financial risk and Z-Score model.It concludes that debt-to-equity swap can reduce the financial risk of enterprises,but its effect is uncertain.Therefore,on the basis of defining the concepts of debt-to-equity swap and financial risk,this paper summarizes debt-to-equity swap,combines principal-agent theory,trade-off theory and signal transmission theory,and uses Z-Score model to construct the analysis framework of this paper.Then,from the analysis of solvency,operation ability,profitability and growth ability,it is found that debt-to-equity swap can improve the financial situation of enterprises and reduce the financial risk of enterprises.But combining with growth ability,it is found that debt-to-equity swap can only help enterprises to "renew their lives",and it is difficult to help enterprises to "change their lives" only by debt-to-equity swap.Enterprises need to use multiple combination punches to truly improve enterprises.Business operation.Then the Z-Score model is used to study the changes of financial risks before and after the debt-to-equity swap.The structural changes of Z value and Z value are compared and analyzed.It is found that the financial risks of enterprises in the year of debt-to-equity swap are greatly reduced and the financial situation of enterprises is well operated.The main reason is that the implementation effect of debt-to-equity swap changes the driving effect of X3 and X4 indicators on Z value.Should,after the debt-to-equity swap,the financial situation of the enterprise has been operating well,and the financial risk has been greatly reduced.However,combined with the analysis,Changhang still has some problems in the process of reducing financial risk by using debt-to-equity swap,which needs other enterprises to learn from in the process of implementing debt-to-equity swap.Based on the above analysis,this paper draws the following conclusions:First,debt-to-equity swaps have reduced the financial risk of Changhang by increasing profitability.In the current period of debt-to-equity swaps,Changhang Airlines obtained large debt restructuring gains.At the same time,financial expenses were greatly reduced,which improved the profitability of assets and freed enterprises from financial risks.Second,debt-to-equity swaps can adjust the financial structure and change financial risks.After the implementation of the debt-to-equity swap,Changhang delivered a good signal to the market,coupled with the implementation of asset restructuring,which caused the stock price to rise sharply after the resumption of Changhang and the market value increased rapidly.By adjusting the financial structure of Changhang Airlines,financial risks are reduced.However,in the latter part of the conversion,due to the failure of asset restructuring,the bad signals were transmitted to the market,which led to a decrease in the market value of the stock price and increased financial risks.Third,debt-to-equity swaps can help companies win time and have the opportunity to reduce their financial risk.At the beginning of the implementation of debt-to-equity swaps,debt-to-equity swaps mainly help companies improve their profitability and reduce financial risks through large debt restructuring,but the effect is temporary;similarly,debt-to-equity swaps regulate the finance by transmitting signals to the market.Structure,due to the instability of market investors,the effect is also uncertain.However,Changhang won time and space through debt-to-equity swaps,adjusted its business strategy,promoted transformation and upgrading,greatly improved profitability and reduced financial risks.Fourth,the implementation effect of Changhang’s use of debt-to-equity swaps to reduce financial risks is limited.Through comparative analysis with Shaanxi coal-based debt-to-equity swaps,it was found that the debt-to-equity swap implemented by Changhang did not improve the internal governance mechanism of the company,did not promote the improvement of the long-haul operating capacity,and failed to reduce the financial risk of Changhang.In view of the shortcomings in the use of debt-to-equity swaps to reduce financial risks in Changhang Phoenix,this paper proposes the following:First,carefully choose the asset restructuring party.The failure of asset restructuring is not conducive to the adjustment of the financial structure of the enterprise,and reduces the effect of debt-to-equity swaps to reduce financial risks.Second,the debt-to-equity swap should focus on optimizing the internal governance mechanism.Market-oriented debt-to-equity swaps are not a "free lunch" for companies to reduce their financial risks.They should pay attention to improving internal governance mechanisms,promoting industrial transformation of enterprises,and meeting policy expectations.Third,formulating scientific and rational and early warning strategic plans.The main reason for Changhang’s financial risks is that the management has not combined the development rules of the industry and has blindly improved the scale of the enterprise.When the industry economic cycle crisis occurs,it cannot adjust the strategy in time to help enterprises to face the industry risks smoothly.At the same time,the company lacks a financial risk warning mechanism and cannot predict the possibility of a financial crisis in advance to help companies adjust their strategies as early as possible. |
PDF Full Text Request