Listed Companies Under The New Guidelines For Debt Restructuring Motivation Research

The debt restructuring guidelines, first promulgated and implemented in 1998, have been amended several times so far. Because the quality of accounting standards will affect the achievement of the optimal allocative function of the capital market, the development of accounting standards and the healthy development of the capital market are closely linked. In China, The scale of stock market is constantly expanding with the development of capital market. As of September in 2010, there have been more than 1800 companies listed in the A-share market in Shanghai and Shenzhen stock markets. During the period of 2007 to 2009, a total of 764 listed companies (accounted for 42.44% of the total A-share listed companies) have implemented debt recombines, in which 562 listed companies obtained the debt restructuring proceeds (accounted for 73.56% of the total number of debt restructured listed companies). Based on the above brief analysis, the debt restructuring of the listed companies in China's securities market is worth paying attention, and the motivation of debt restructuring also need to be further studied.Although there has been amount of listed companies with good operation system and high profit in China, still, there are plenty of companies are hardly to survive in the market competition mechanism due to their yearly deficits, low capital utilization and poor management. For these companies, they usually choose to debt restructure to avoid the loss and try to make profits. In 2006, the Ministry of Finance amended the accounting standard of debt recombines again to make it correspondence with the international accounting standards. From an objective point of view, the new guideline has made the debt restructuring more accurately. At the same time, the measurement model of fair value has been introduced in, which will make the accounting information from both the creditors and debtors more objective and fair. The debt operating space will be narrowed down as well. However, this revision has caused a lot of controversy. A view showed that the introduction of fair value would cause the inflated profits because the debt restructuring proceeds would be included in the profit in the current period, which probably created a chance for the bad capital market behavior. Another point of view believed that the newest revision of the guidelines would achieve the convergence with the international accounting standards, which embodied the essence of transaction of the debt restructuring, and the debt restructuring would not be abused. However, in the actual implementation, we never know whether the new guidelines have been abused, and also do not know what the truly motivation of the company's debt restructuring is. In order to give an answer to these questions, this paper has an analysis and research on this issue.Based on the background of the new debt restructuring standards and the annual reports published by the listed companies in Shanghai stock market from 2006-2009, this paper analyzes the motivation of the debt restructuring of the listed companies, and tries to give a comprehensive and objective judgment on their motivations.Based on previous studies, this paper firstly gives a detailed overview of the development of debt restructuring and the forms of the listed companies'debt restructuring. Secondly, the paper aggregates the relevant data from the annual reports of the listed companies in Shanghai A-stock market in the period of 2006 to 2009. and analyzes the financial influence of the debt restructuring to these companies, so as to distinguish the motivation of there restructuring.