Research On The Business Performance Effect Of The Market-oriented Debt-to-equity Swap

Under the current market economy system,China’s economy developing rapidly,but Chinese enterprises are facing the predicament of excessive leverage and rapid growth in debt.The excessive reliance of banks on bank loans has increased the risk of non-performing loans in commercial banks.Based on this background,the state has launched five major tasks of supply-side structural reform and "three eliminations,one reduction and one supplement".In October 2016,the State Council proposed the use of market-oriented debt-to-equity swaps as one of the measures to reduce corporate leverage,and advocated that companies and banks carry out debt-to-equity swaps under the principle of marketization to reduce corporate debt burdens and reduce non-performing loans to banks.Promote the steady and orderly development of China’s economy.Yunnan Tin Industry is the first local state-owned enterprise to carry out market-oriented debt-to-equity swaps in China.Its market-oriented debt-to-equity swaps are of great significance to the implementation of market-oriented debt-to-equity swaps in China.This article takes the case of Yunnan Tin’s market-oriented debt-to-equity swap as an object of analysis to study the impact of its implementation of debt-to-equity swaps on operating performance.Based on the research results of previous generations,this article comprehensively sorts out the literature on debt-to-equity swaps,and highlights the characteristics of market-oriented debt-to-equity swaps by comparing the differences between the two rounds of debt-to-equity swaps.In the case section,the in-depth analysis of Yunnan Tin’s debt-for-equity conversion,the process,and the conversion model.In the analysis of the impact of market-oriented debt-to-equity swaps on the company’s operating performance,it is divided into short-term effects and long-term effects for a comprehensive analysis.In terms of short-term impact analysis,the financial indicators analysis method was used to analyze the four major financial capabilities of the company,and the changes in the relevant financial indicators of Yunnan Tin Industry before and after the market-oriented debt-to-equity swap were summarized.Using Event Study to analyze the market’s response to the conversion and the impact on the corporate performance.In terms of corporate governance,by analyzing changes in investment behavior,operating efficiency,and industrial structure,it reflects the changes and impacts of debt-to-equity swaps on corporate management operations.In terms of long-term impact analysis,the free cash flow forecast is performed using the income method,and the value of the company is estimated,so as to obtain the impact of debt-to-equity swaps on the value of the company.Based on the above research,we can conclude that the implementation of market-oriented debt-to-equity swaps is conducive to the improvement of corporate financial capabilities and corporate value,optimizes the corporate capital structure,and plays a positive role in improving corporate management.Gained relevant experience and inspiration in the design of market-oriented debt-to-equity swap schemes,funding sources and supervision,and equity exits,providing references for a large number of companies that intend to implement debt-to-equity swaps,and to provide research on debt-to-equity swaps in state-owned enterprises and non-ferrous metals New ideas.