Research On The Effect Of Listed Companies' Debt-Equity Swap On Stock Price

With the development of economy,the global economic environment has become more and more complex,and our country's economy has entered a new normal.By 2015,the debt ratio of non-financial corporate sector in China reached 131%.In order to help enterprises reduce costs by leveraging and reduce the bad assets rate of banks,the State Council promulgated the "Opinions" on the conversion of debts on October 10,2016,marking the beginning of a new round of debt-to-equity swaps.This paper has a positive effect on the impact of debt-to-equity conversion of listed companies in China on stock prices.For debt companies,on the one hand,they can reduce the leverage ratio and reduce interest expenses.On the other hand,they will give an indirect reference to whether the executives of listed companies participate in debt-to-equity swaps.For investors,they can give them some investment advice.For the securities market regulators,it is beneficial for the supervisory authorities to establish a more complete information disclosure mechanism,reduce the losses of investors,and ensure the stable and better development of the securities market.This article is divided into five parts.The first chapter is introduction.The second chapter is the theory of debt-to-equity swap and research hypothesis.It mainly introduces the definition and types of debt-to-equity swaps and the theory of the effect of listed companies' debt-to-equity swaps on stock prices.Based on the theoretical analysis,the paper puts forward four hypotheses.The third chapter is about the overview of the debt-to-equity transition of Chinese enterprises.It mainly introduces the contrast between the two rounds of debt-to-equity swaps and the potential risks,problems,and difficulties facing the new round of debt-to-equity swaps.The fourth chapter is an empirical analysis of the effect of stock-to-equity conversion of listed companies on stock prices.It mainly introduces the incident research method and four empirical results and analyzes each empirical result.Finally,it compares four empirical results.The fifth chapter is conclusions and policy recommendations.This article adopts the event research method.The selected sample is a listed company that made market-denominated debt-to-equity conversion from October 10,2016 to December 31,2017.It is a total of 102 listed companies that have undergone the first debt-to-equity swap.Twenty-five listed companies underwent the second debt-to-equity swap,27 listed companies under the third debt-to-equity swap,and 25 listed companies with debt-to-equity swap funds falling into the(-5,5)event window.Taking the(-125,-6)as the estimation window and the debt-equity swap announcement date as the event day,the sample's average abnormal return rate(AAR)and cumulative average abnormal return rate(CAAR)are calculated.Through the single-sample T-test,data analysis and statistics were completed by Stata software and Excel software,the following conclusions were drawn:The stock price effect of the first time debt-to-equity conversion of listed companies was significantly positive;the stock price effect of the second debt-equity swap of listed companies.Significantly positive,but the duration of the impact is shorter than that of the first debt-to-equity swap;the stock price effect of the third debt-equity swap of the listed company is significantly negative;the stock price effect of the listed company's debt-to-equity swap fund landing is significantly negative.By comparing the effect of three debt-to-equity swaps and stock-to-equity swaps,it is found that the positive effect of the first debt-to-equity swap is the most obvious,the longest duration,and the CAAR is higher than the others.At the same time,the negative stock price effect caused by the third debt-to-equity swap is the most obvious,the longest duration,and the cumulative average abnormal return rate of the sample is lower than the other.