The Research On The Effect Of Debt To Equity Swap In State-owned Enterprises Based On Equity Fund Model

In the late 1990 s,in order to deal with a large number of Non-performing assets of bank,China launched the debt to equity swap oriented by government.In 2015,faced with the overcapacity and high leveraged of state-owned enterprises and the difficulties of advancing the supply side reform,the debt to equity swap has started again.The current round is oriented by market so the conditions and prices is decided by the participants themselves and the government is only the policymaker and the guide of macro policy.Due to the different orientations,there are differences in multiple ways.The difference is also reflected in the models,in which equity fund is the dominant model of this round.Therefore,it is necessary to study the effect of the debt equity swap in the new model.The paper selects the first A share listed company that is directly involved in the market of debt to equity swap as a case study,and explores the effect of debt to equity swap in state-owned enterprises based on the model of Equity Fund.Firstly,the paper discusses some theories of debt to equity swap,compares the two round,mainly through all aspects of the market to reflect the differences,makes a comparative analysis of four models of current round,discussing the advantages of equity fund model and compares the different models so that different enterprises can choose different model according to their situation.In the part of case study,analyzing the reasons causing high debt of Yunnan Tin Company Limited from internal and external,introducing the scheme from the equity fund model,investment conditions and commitments.The paper mainly focus on the analysis of the market reaction of Tin Company Limited,respectively from the price trend and applying event study to analyse the changes of the cumulative abnormal return rate;the change of capital structure;the changes in debt indicators,such as solvency and financial expenses;the change of management to evaluate the effect and find some risks.Finally,making a conclusion that Tin’s debt to equity swap has preliminary positive effect.From the point of enterprise,the paper put forward that the enterprises can establish the evaluation system,following and insisting on market-oriented;making the use of policy and the advantages of model;strengthening the supervision to AMC.Meanwhile,combining the debt equity swap with the enterprise to the structure,paying attention to the increase of the capital cost and tax cost.