A Study On The Impact Of Market-oriented Debt-to-equity Swap On The Performance Of Private Enterprises

Under the background of reform and opening up and market economy,Chinese enterprises have been expanding production scale and improving production efficiency by attracting investment from various parties,introducing advanced technology and improving corporate governance,and have entered a period of rapid development.But the expansion of the firm led to the assumption of excessive debt,which was poor quality and extensive development.The debt crisis has triggered a series of problems,such as the high leverage ratio of enterprises,the decline of profitability,the rapid growth of non-performing loan ratio of banks and so on.These problems seriously endanger the normal development of the market economy and make our country fall into the current situation of the serious shortage of domestic and external demand.Moreover,trade frictions between China and the United States have been frequent,and downward pressure on the economy has been mounting.In this case,the government began to introduce various measures for supply-side structural reform,also known as deleveraging,and market-oriented debt-for-equity swaps came into being.In the first round of debt-to-equity swap,most of the participants were state-owned enterprises,and the participation of private enterprises was low.However,private enterprises are an important part of China's economy.Without or without the participation of private enterprises,the goal of reducing the high leverage level of the real economy cannot be truly realized.Therefore,the State Council officially launched the second round of market-based debt-to-equity swaps on October 10,2016.Compared with last time,this time will adopt the principle of marketization and legal system,the main purpose is to reduce the corporate leverage ratio to improve the level of corporate governance,so as to promote the transformation of enterprises.As a pillar industry in China,the steel industry is asset-heavy and the phenomenon of high leverage is more common.Debt-for-equity swap is an effective method to help carry out the supply-side structural reform and deleverage more efficiently and steadily.Due to internal financial difficulties and the deepening of external supply-side structural reform,Nangang launched the debt-for-equity swap plan.This paper takes Nangang Corporation as an example to analyze the impact of debt-to-equity swap on the enterprise from three aspects of financial performance,non-financial performance and enterprise value.It is found that debt-to-equity swap has an obvious effect on reducing the leverage of the company.The debt situation of the company is gradually improved,the asset-liability ratio is reduced and the debt dilemma is alleviated.After the debt-to-equity swap,the innovation ability and market share of the enterprise have been improved,and the market competitiveness of Nangang has been substantially enhanced.The short-term market effect of debt-to-equity swap was analyzed by event study method.The market gave a significant positive reaction.EVA analysis shows that debt-to-equity swaps also have a positive impact on enterprise value,and the development trend is gradually stable.Finally,this paper proposes that debt-for-equity enterprises should improve their ability of sustainable development,design reasonable debt-for-equity programs,the government should provide a healthy market environment and other suggestions.