Research On Social Bankruptcy Cost And Debt Restructuring

Under the background of supply-side reform in China,effectively reducing corporate financial leverage is important for the good development of corporate and banking financial institutions.However,the debt level of Chinese enterprises and banks has always been at a high risk.In order to reduce financial leverage,debt restructuring is one of the effective ways.In China's transitional economy,the political goal of stabilizing and expanding employment is the primary task of local governments.If enterprises cannot get rid of financial difficulties and enter bankruptcy liquidation,there will be huge social bankruptcy costs.So when enterprises are in financial distress,will the social bankruptcy costs borne by enterprises help to achieve debt restructuring and reduce the leverage rate of enterprises?This paper takes the 2007-2017 Shanghai-Shenzhen A-share non-financial financial distress listed company as a sample to study the impact of corporate social bankruptcy cost on its debt restructuring when it faces bankruptcy risk.The structure is as follows:First,the introduction includes the study background and significance.Secondly,it reviews the domestic and foreign literature on the cost of social bankruptcy,capital structure and debt restructuring,and then summarizes the innovative points of this study.The second part is the system background,which introduces the background of administrative decentralization reform and financial system reform in China.This is also the fundamental institutional reason for studying the cost of social bankruptcy in China.The third part is the theoretical basis.This paper studies the impact of social bankruptcy costs on debt restructuring of financial distressed companies.First,it defines the concept of financial distress and social bankruptcy costs and measures the indicators.Secondly,it describes the debt contract and debt renegotiation theory,and analyses the factors that contribute to debt renegotiation agreement after debt default.The fourth part is hypothesis,hypothesis 1 discusses the impact of corporate social bankruptcy costs on debt restructuring,and hypothesis 2 discusses the impact of political connections on the relationship between the two.The fifth part is the research design,including sample estimation and data sources,model construction and variable definition.The sixth part is the analysis of regression results.Descriptive statistics,regression analysis,grouping regression and the robustness are used to verify the research hypothesis.The seventh part is the mechanism of the effect of social bankruptcy cost on debt restructuring,and the regulating effect of political association on both of them can further verify the mechanism of government intervention.Then,study the impact of social bankruptcy cost on debt restructuring targets and debt restructuring gains and losses and getting rid of financial distress.The eighth part is the conclusion,forward suggestions,the research deficiencies and prospects.The main conclusions are as follows:(1)The higher the cost of social bankruptcy of distressed companies,the easier it is to reach debt restructuring agreement.(2)Government intervention is an important mechanism for social bankruptcy cost to become a factor promoting debt restructuring.Meanwhile,the positive correlation between the two is more significant in political affiliated enterprises,which proves the importance of government intervention again..(3)Under the government's intervention,the social bankruptcy cost can promote the debt debtor and financial creditors to reach a debt restructuring agreement.(4)The cost of social bankruptcy has increased the intensity of negotiations in debt renegotiation,which is manifested in gaining more debt restructuring income.(5)Debt restructuring based on the cost of social bankruptcy can help distressed companies to achieve temporary relief in a short time,but it has no significant impact on stability relief.The main innovations of this paper are:(1)Enriching the theoretical research of debt restructuring.The existing literature studies the influencing factors of debt restructuring from property rights,financial ecological environment and debt structure.This paper studies the impact of corporate social bankruptcy costs on debt restructuring agreements in the context of financial distress companies,providing empirical evidence for the impact factors of debt restructuring agreements.In addition,the paper tests the mechanism of social bankruptcy cost promoting debt restructuring and finds that government intervention is the main influencing factor.(2)Broadening the further study of social bankruptcy costs.The measurement of enterprise bankruptcy cost in the existing literature mainly focuses on the loss of the enterprise itself,and seldom studies the bankruptcy cost from the social perspective.And there are some literatures that the social bankruptcy cost of enterprises increases the risk of debt default.However,there is no literature to further study the impact of social bankruptcy costs on enterprises after financial distress.(3)Further subdivision of debt restructuring types:in the process of debt restructuring renegotiation,examine the impact of social bankruptcy costs on the types of debt restructuring objects and the profit and loss of debt restructuring After debt restructuring,from the perspective of getting rid of financial distress,this paper examines the after-effect of debt restructuring caused by social bankruptcy cost as a facilitating factor.