An Study On Debt Restructuring Motivation And Performance Of Listing Corporations

Debt restructuring becomes a hot academic research once again after its specific details have been modified according to the new accounting standards, which leads Listed companies adjust their business strategies as the revised standard. There are already quite a lot of theory and empirical study on debt restructuring, but it has to be innovated because of the introduction of the new rules. Besides, view on the issue should also be changing with the times, especially under the background of the gradual improvement of the capital market. Debt restructuring used to be charged as negative and thought of means that the enterprises manipulate earnings. This does exist but we can not generalize. If we classify enterprises according to their operating conditions, are the motivations that different types of companies use debt restructuring same? Are the trends of different types of companies consistent after restructuring? These questions have yet to be tested by theory and empirical analysis.This paper reviews some literatures, such as the synergistic effect theory, signal theory, overconfidence hypothesis theory, free cash flow hypothesis theory and so on, analyses deeply on the effect of operating conditions on Motivation of restructuring debt and performance, takes the financial distress as classification criteria to categorize the Debt restructuring listed companies-dividing into financial distress and non-financial distress, research the main motivation for debt restructuring and the long-term performance after the reorganization. At the end it puts forward the research hypothesis. In the empirical process, we select 93 A share of listing corporations as a research sample, do correlation analysis and multiple linear regression analysis on the amplitude of debt restructuring and the major motivation. We also apply the factor analysis on the performance after structuring to calculate the annual performance score, and observe the effect of different types of corporate performance through the Wilcoxon sign test.Firstly, this paper empirically tests the relationship between financial distress and debt restructuring amplitude, and concludes that the amplitude of Non-financial distress listing Corporation was significantly less than the financial distress ones through the Man-Whitney test.Secondly, this paper empirically tests the restructuring motivation of the financial distress and non-financial distress types of listing Corporation. The study shows positive correlation between debt restructuring amplitude and operating profit growth rate when it comes to Non-financial distress listing Corporation, which shows that the motivation of this kind of enterprises reorganize debt is mainly to improve the operating conditions. While it is negative correlation between the debt restructuring amplitude and the changes of asset liability ratio, which tells its debt restructuring does not actually improve the financial situation. For financial distress listing Corporation, it is positive relation between debt restructuring amplitude and operating profit margin, which tells that the bigger the debt restructuring is, the stronger the motivation of manipulating profit and managing earnings by debt restructuring is.Thirdly, this paper empirically tests the restructuring performance of financial and non-financial distress listing Corporation. The research conclude that the long-term performance has improved after debt restructuring for non-financial distress listing Corporation while it is not so obvious for the other.Finally, based on the above research, this paper presents the relevant policy recommendations. From the perspective of capital market regulation, we should further improve the initial public offering and delisting system, promote the regulatory policy. The company itself should straighten out debt motivation in order to promote effective restructuring. At the same time, it is also necessary to improve the structure of its own, prepare for improving the management and enhancing the operating power fundamentally. The government should reduce the direct administrative intervention and follow the rules of the capital market. The state should enact laws and regulations on debt restructuring.