Performance Analysis Of Debt To Equity Swap In Private Non Ferrous Metal Enterprises

The report of the 20 th National Congress of the Communist Party of China proposes to"optimize the development environment of private enterprises,protect the property rights and entrepreneurial rights of private enterprises in accordance with the law,and promote the development and growth of the private economy.It emphasizes the need to set down the requirement of equal treatment of state-owned enterprises and private enterprises from the system and law,and encourage and support the development and growth of the private economy and private enterprises from policies and public opinion.The market-oriented debt to equity swap has gradually covered private enterprises since 2016,but private enterprises still have many disadvantages compared to state-owned enterprises.As an effective financing method,debt to equity swap can provide more financing channels and more flexible capital operation methods for private enterprises.To achieve the effect of reducing the operating leverage of enterprises,with the continuous strengthening of policy support,it is particularly important to study how private enterprises can use debt to equity swap to improve their own operating conditions and promote the healthy development of enterprises.As a typical cyclical industry,the effectiveness of the non-ferrous metal industry with the support of debt to equity conversion remains to be studied.Huayou Cobalt Industry is the first private non-ferrous metal enterprise in China to carry out market-oriented debt to equity conversion.Huayou Cobalt Industry occupies a leading position in the non-ferrous metal industry,with strong industry representation and obvious characteristics.Therefore,this article selects Huayou Cobalt Industry as the case study object to explore the process and experience of Huayou Cobalt Industry’s debt to equity conversion,which has strong research significance.On the basis of understanding the process of Huayou Cobalt’s debt to equity swap,the event study method is used to analyze the market effect of Huayou Cobalt on the two event days of the start date and the end date;Secondly,the comparative analysis method is used to analyze the financial comparison of Huayou Cobalt before and after the implementation of debt to equity swap.The comparative analysis includes horizontal comparison and vertical comparison.Finally,the conclusion of this article is drawn.The following conclusions can be drawn from the case analysis of Huayou Cobalt’s market-oriented debt to equity swap: Firstly,Huayou Cobalt’s successful implementation of market-oriented debt to equity swap has provided effective implementation experience for private non-ferrous metal enterprises.Secondly,the market-oriented debt to equity swap has a certain positive effect on the cumulative excess return rate.Thirdly,the market-oriented debt to equity swap has a promoting effect on improving the financial indicators of enterprises.