| Since 2012,influenced by the continued high rate of economic development,economic structural changes and environmental governance,China’s overcapacity industry has gradually entered a cyclical bottoming out phase,with massive losses in the industry.During this period,many development problems emerged for steel companies.The most obvious feature of the industry was the serious overcapacity and the imbalance between supply and demand.In order to gradually revive steel demand and add new impetus to the sustained economic growth of the steel industry,the central government formally proposed "promoting supply-side structural reform"（Li Keqiang,2015）at the Economic Work Conference in December 2015.Based on the policy requirement of "supply-side structural reform",as one of the major industries to be reformed,the performance changes of China’s iron and steel industry and enterprises before and after the reform could best reflect the effectiveness of the reform,and it is necessary to focus on it.Before writing the paper,we firstly examined the research on supply-side reform and financial performance evaluation methods conducted by domestic and foreign scholars in the past few years,as well as the findings of domestic scholars’ research on the financial performance of the steel industry during the time of the supply-side reform,and explained the connotation and tasks of the supply-side reform,the new supply-side economic theory and principal-agent theory used in the demonstration,the method of factor analysis and the EVA economic valuation method.Second,after sorting out the development status before the supply-side reform and the specific practices in the reform,data from the annual reports of 23 listed A-share companies in the steel industry between 2011 and 2020 are selected,and the financial performance evaluation system is constructed by selecting 15 financial indicators,taking into account the characteristics and impacts of the supply-side reform and the summary of the previous research literature,and the financial performances of the steel industry for 10 years before and after the reform and Factor analysis shows that the implementation of supply-side reform has a significant positive influence on the financial performance of listed steel companies,with the most significant increase in operating capacity and development capacity.Compared with the pre-reform period,only 8 out of 23 industry enterprises have improved their overall financial performance ranking,which indicates that there is still room for most industry enterprises to improve their financial performance.Then,this paper investigates the Shagang Group’s financial performance by using the classical financial analyzing method,through which it is discovered that after the supplyside reform,Shagang Group’s repayment capacity,operating capacity,and development capacity have increased compared to itself,profitability has decreased,and the whole levels of performance have been improved and are ranked among the first in the sector.The economic value added method was also applied to verify the comprehensive financial performance score of Shagang Group in the previous factor analysis method,and it was validated that the Shagang Group’s economic added value was on an increasing trend after the supply-side reform,and the company also created the value during this period.Finally,this paper uses the reform initiatives of Shagang Group as a blueprint to make the following suggestions to other steel enterprises: enterprises should strengthen technological innovation and expand their technological advantages;change financing methods and reduce leverage by multiple means;operate finely and reduce non-essential costs;and advocate green development and implement energy conservation and emission reduction. |
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