Research On The Financial Method Of Disposing "Zombie Company" Under The Background Of Soes Reform

In recent years,“Zombie Company” has become a big obstacle to China's economic transformation and upgrading.After Fifth Plenary Session of the 18 th CPC Central Committee,Chinese government has gradually showed the determination of disposing of “Zombie Company” and takes it as one of the core tasks of promoting the structural reform on the supply side.According to the survey,most “Zombie Company” belongs to state-owned enterprises,mainly because the state-owned enterprises are generally large in both economic size and population of employees,which makes them play a very important role in the local economic development.Compared to general private enterprises,they are easier to get support from government and bank to keep survival even after loses in long term.However,the existence of “Zombie Company” has created huge harm to the social and economic environment.They are generally overcapacity,take up a lot of social resources without producing benefits and squeezed the survival and development space of advantageous enterprises.At the same time,because of the high debt ratios as well as the poor solvency ability of the company.Not only they can't guarantee their own normal business,but also caused a certain degree of damage to the stakeholders.Therefore,the disposal of “Zombie Company” can reduce the heavy burden of China's economic development,can be an important breakthrough of the current reform of state-owned enterprise,the adjustment of the economic structure,and the promotion of economic development.In this context,the study about the disposal of “Zombie Company” is of great significance,and this paper is going to explore this theme from a new perspective with financial method.This paper has been divided in 7 parts:The first part introduces the research background and significance of this study,and analyzes current research status of “Zombie Company” both at home and abroad.Meanwhile it comes out with the research content and ideas of this paper.The second part is about some basic theory research which related to the disposal of “Zombie Company”.This part defines the definition and characteristics of “Zombie Company” at the first,and then studies the relevant theoretical basis of disposing “Zombie Company”,which includes the theory of budget soft constraint theory,M & A theory,debt restructuring theory and so on,we found that at the theoretical level,the main reason for the existence of “Zombie Company” is that the government or the banks are unconditionally fostering them.But mergers and acquisitions,debt restructuring and other financial methods can be achieved to adjust corporate debt and debt relations,improve its operating status and so on.The third part are the analysis of the causes and present situation of “Zombie Company” from the aspects of the distribution of “Zombie Company”,the current state of disposal,the financial problems in the country and so on.Then it come the explanation of causes of “Zombie Company” from the macro and micro levels.The macro-causes include: state-owned enterprises are not complete restructuring;non-market factors such as intervention.The micro-causes include: Zombie Companies' narrow business;technical content are not high;Lack of innovation and so on.In the following three parts three different financial methods have been listed out to deal with the “Zombie Company” problem,including mergers and acquisitions,debt restructuring and bankruptcy.Each part of the study follows the same idea,first analyzes of the concept,the application and the implementation of the result for each method.And then points out the key links of each method to be successfully implemented.Finally,by combining the relevant cases,it creates an opportunity to explain the actual operation of each method and its applicability,and the relevant revelation is obtained.The final part summarizes and compares the main points of this paper,namely,a summary and comparison of these three methods of dealing with “Zombie Company”.Then,it puts forward the shortcomings in the research process and makes a prospect for the future study.Through the research of this paper,it is found that,in general,the “Zombie Company”,which still has market value and development potential,can adopt merger & acquisition and debt restructuring;which has no reorganization possibility need to take bankruptcy liquidation immediately to withdraw from the market.In addition,bankruptcy liquidation can make “Zombie Company” completely "death",bankruptcy reorganization can make “Zombie Company” bankruptcy but still exist,meanwhile mergers and acquisitions,debt restructuring can reduce debt pressure of “Zombie Company” at a certain level and optimize the resource allocation of the corporation.It can make adjustments to the “Zombie Company” on their own governance structure,operating mechanism,management system,so as to promote the “Zombie Company” to the normal production and business activities.