A Case Study On The Financial Distress Response Of Companies With Different Property Rights

As China’s economy enters a new normal stage,the competition among enterprises is also becoming more and more intense.Overlaying the complex and changeable political and economic forms and environment at home and abroad,more and more enterprises fail to develop well in an unstable macro environment and fall into financial distress.Enterprises in distress will not only slow down their own development speed and reduce their reputation,but also cause serious losses to stakeholders.Therefore,how to deal with financial distress quickly and effectively has become an important topic of common concern in the theoretical and practical circles.According to the nature of property rights,Chinese enterprises can be divided into state-owned enterprises and private enterprises.There are many differences between the two in the process of dealing with financial distress.On the basis of the existing literature,this paper adopts the multi-case study method,taking Chongqing Iron and Steel and Guirenniao as the representatives of state-owned enterprises and private enterprises respectively,which have been in trouble and finally successfully rescued,and tries to make a horizontal comparison of the similarities and differences in the formation of financial distress,the specific measures to deal with financial distress,the cost of dealing with financial distress,and the effect of dealing with financial distress from the perspective of property rights differences.In order to explain the above contents,this paper firstly compares and analyzes the reasons why the two case companies fall into financial distress,and then compares the similarities and differences of the countermeasures adopted by the case company through the four dimensions of corporate governance restructuring,strategic and operational restructuring,asset restructuring and financial restructuring,and compares the distress response costs of the two companies from the perspectives of enterprise turnaround and financial financing.Finally,the market reaction of different countermeasures and the overall economic consequences of the implementation are compared to show the response effect of its financial distress.The specific research results of this paper show that:(1)Financial distress is a negative consequence under the combined action of various reasons,but due to the different nature of property rights,the specific reasons for enterprises to fall into financial distress are different.(2)Different property rights have a certain impact on the response path of the choice of financial distress.One is that state-owned enterprises are more likely to get rid of financial difficulties through asset restructuring and financial restructuring,while private enterprises are mainly based on strategic and operational restructuring in order to get rid of financial distress.Second,state-owned enterprises are more inclined to choose non-market-oriented coping methods,while private enterprises choose more market-oriented coping methods.(3)Compared with private enterprises,state-owned enterprises have lower cost to deal with financial distress.(4)In the short term,state-owned property rights play a positive role in coping with financial distress,but in the long run,state-owned property rights play a negative role in coping with financial distress.In theory,this paper can enrich the relevant research on the nature of property rights and the response to financial distress.In practice,by combing the experience and lessons of enterprises with different property rights to deal with financial distress,it has certain reference value for enterprises in trouble to get rid of financial distress.