Leverage Manipulation And Its Economic Consequences In Chinese Enterprises

In our economic life,large and small enterprises also use the power of leverage to leverage their own development,which we subdivide into financial leverage and operating leverage.Enterprises seize fleeting development opportunities by increasing leverage,but the continuous increase of leverage will not only increase the financial risks and bankruptcy costs of enterprises,but also may further trigger social financial crisis.Since the financial crisis in 2008,the leverage level of Chinese enterprises has been rising,and the Chinese government has also begun to realize the potential risks brought by increasing leverage.Therefore,China has officially entered the stage of mandatory deleveraging since 2015,and the Chinese government has also introduced a series of policies to curb the continuous increase of corporate leverage.Meanwhile,due to the continuous progress of accounting ideas,Chinese investors have also begun to shift their attention from the operating profits of enterprises to the health of their assets and liabilities,forming the so-called "assets and liabilities apparent".Under the dual effect of these two,enterprises have begun their own deleveraging activities,but the deleveraging is not a matter of one day? Therefore,under the policy pressure and the attention of investors,enterprises have the motivation of leverage manipulation.They cover up their real leverage level through various manipulation means,so as to achieve the purpose of formal leverage to reduce government supervision and whitewash statements to attract investors’ investment.This paper studies the motivation,means and economic consequences of corporate leverage manipulation,makes an in-depth analysis of the impact of leverage manipulation on enterprises,and helps investors understand the means of corporate leverage manipulation so that they can make clearer investment judgments.In the theoretical part,this paper is mainly based on the optimal capital structure theory,information asymmetry theory,agency cost theory and signal transmission theory as the theoretical basis for studying Evergrande leverage manipulation.Secondly,the transformation of the real estate policy,the inherent restrictions of the real estate industry and the implementation and changes of the deleveraging policy are sorted out.At the same time,the change trend of the overall leverage level of Chinese listed companies,all walks of life and enterprises with different property rights is analyzed,and the lever manipulation methods of Chinese listed companies are analyzed.In the case part,this paper chooses the case of China Evergrande Group,focusing on its leverage manipulation method of issuing perpetual bonds,and analyzes in detail why China Evergrande’s issuance of perpetual bonds is essentially a leverage manipulation method from the aspects of its formal terms and substantive treatment.Combined with its corporate strategy,the purpose of leverage manipulation is analyzed,including the realization of financing needs and the reduction of external supervision.Finally,the economic consequences of leverage manipulation are expounded from four perspectives: financial risk,operating results,investment efficiency and agency costs.Finally,this paper puts forward relevant suggestions from the perspective of enterprises and supervision: Enterprises should recognize manipulation risks,avoid adverse effects,strengthen risk awareness,improve internal systems,improve capital management ability,and reduce leverage risks.In terms of supervision,We will strengthen the regulatory system,increase penalties,improve accounting standards,improve audit quality,optimize supporting policies,and enhance our capacity to deleverage.