Research On The Impact Of Market-oriented Debt-to Equity Swaps On Corporate Performance

With the China’s economy enter a period of new normal,economic development is facing speed shift nodes,structural adjustment nodes,and power conversion nodes.President Xi pointed out that the main contradiction in country’s economic development lies in the supply side,and the focus of supply-side structural reform is to implement the five tasks of the country’s "three eliminations,one reduction and one supplement".Under the current situation that high leverage of Chinese enterprises has become a common problem,it is imperative to promote enterprises to reduce leverage ratio,prevent and resolve debt risks,and promote enterprises to reduce costs and increase efficiency.In order to solve the problem of high corporate leverage and implement the national macro-level deleveraging task,the State Council issued two guiding documents in 2016,the "Opinions on Actively and Steadily Reducing the Leverage Ratio of Enterprises" and the "Guiding Opinions on Market-Based Bank Debt-to-Equity Swap".The prelude to the market-oriented debt-to-equity swap.With the deepening of the policy,most of the participating companies have realized their business escape.It is of great significance to explore the role of market-oriented debt-to-equity swaps in the improvement of corporate performance.Therefore,this paper studies the economic effects of policy implementation based on this logic,and explores its impact on corporate performance.,and further explore its impact mechanism.Starting from MM theory,principal-agent theory,trade-off theory,etc.,this paper puts forward research hypotheses,selects 64 listed companies that have participated in market-oriented debt-to-equity swaps since 2016 as research samples,and uses double difference model(DID)for empirical testing.Explore the impact of market-based debt-to-equity swaps on corporate performance,and further analyze the impact mechanism.In the empirical test,we first conduct benchmark regression to demonstrate the effect of market-oriented debt-to-equity swap on corporate performance,and then use leverage ratio(LEV)and equity concentration(EOS)as intermediary variables to study whether the impact mechanism is established.,and a heterogeneity analysis was performed.Finally,this paper draws the following research conclusions:(1)The implementation of debt-to-equity swap has a positive effect on corporate performance,and corporate performance will be improved.(2)After the enterprise implements the debt-to-equity swap,the leverage ratio decreases,the capital structure of the enterprise is improved,and the corporate performance is improved.The leverage ratio plays an intermediary role in the impact of the market-oriented debt-to-equity swap on the corporate performance.(3)After the enterprise implements the debt-to-equity swap,the equity concentration will increase,the corporate equity structure will be optimized,and the corporate performance will be improved.The equity concentration will play an intermediary role in the impact of market-based debt-to-equity swaps on corporate performance.(4)The impact of market-oriented debt-to-equity swaps on the performance of listed companies has industry heterogeneity.In order to ensure the accuracy of the research results,this paper adopts the placebo test and the propensity matching score method to conduct robustness tests,which both show that the research conclusions are robust.Based on the above results,this paper puts forward countermeasures and suggestions for regulatory authorities,banks,listed companies,investors and other parties.This paper’s research on the impact mechanism of policy implementation on corporate performance is a supplement and improvement to previous research,in order to promote the orderly development of market-oriented debt-to-equity swaps,promote the process of policy implementation,help enterprises develop out of difficulties,and implement the national macro "deleveraging" "Task.