Research Of Lova Bond Default Based On Harvard Analytical Framework

Compared with issuing stocks,issuing bonds has lower finance cost and less restrictions on companies,therefore they prefer to use debt finance.In recent years,Chinese capital market has been developing rapidly.Chinese bond market developed later than the foreign bond market.The default of the "11 Chaori Bond" means that the record of zero default bond market in China has broken.Bond default phenomenon has come to be normal.However,the supervision mechanism of Chinese bond market is not mature enough.Although "rigid redemption" was broken,the bond market participants are still affected by it.The market system for subsequent disposal is not sufficient enough.The interests of the creditors are not reasonable protected when default happens.As the main body for issuance of bond,companies often only focus on the positive affection of bond.This usually lead to the overwhelmingly aggressive issuance of bonds for rapid expansion of business and other investment activities,while ignoring the pressure of debt leverage.This will lead to an unreasonable debt structure of the company caused by excessive debt issuance,which will further affect the liquidity and refinancing ability of the organization.However,once the overstock of matured debts are due in the short term,there is a risk of the shortage of available cash that can cause the breaking down of a group.If this is not handled properly,the company may even go into bankruptcy.This paper used Harvard analytical framework analyse the bond defaults of "17 Luowa Technology CP001".This bond is a typical type of default in 2018.From the financial performance of the company,it is unable to predict the bond default event.Therefore we analyse in detail from strategy,accounting,finance and prospect analysis,combining group financial information and non-financial information with the actual financial status of the group for nearly four years and signs of bond defaults.lt provides investors with factors to consider when choosing a target company;suggestions for the company about build an effective internal control system and make effective financial management.It also contains suggestions for the regulatory authorities to increase the speed of establish more mature bond market rules.This case also broadens the practical application scope of Harvard analytical framework.This paper uses case analysis.There are five Parts.The first part is the introduction,which mainly describes the background,research significance,literature review,research methods,innovation and paper structure.The second part is the definition of related concepts and the theoretical basis.It introduces the main content of each part of Harvard analytical framework and the relationship between each part.Porter's five forces forces model,SWOT model and other analytical tools are used in the analysis process.Ashridge model theory of parent-subsidiary relationship is also used.This paper introduces the theory of information asymmetry and expounds the methods and functions of credit rating.The third part is the introduction of Lova group's bond default cases,which mainly explains the whole process of default.The fourth part mainly introduces the group's operations and makes an in-depth exploration of the overall situation of Lova group from four aspects based on the group's financial information and non-finaneial information through the Harvard framework analysis.The fifth part is the suggestions to market investors,issuers and regulators through the case of bond default and relevant suggestions for accelerating the maturity of the bond market.The innovation of this paper lies in the analysis of the special financial performance of the 2018 bond defaults,called "cliff-top default",and the selection of typical default enterprise with this characteristic to provide suggestions for market participants.Many literature analyze bond default from the perspective of cash flow,focusing on the company's liquidity problem.This paper mainly analyzes the irrationality of the information disclosed in the company's financial statements from the perspective of financial analysis,in order to expose its fraudulent financial performance.From the perspective of financial statements to analyze and understand the influence of relevant factors.The weakness of this paper based on the incomplete collection of relevant data,insufficient understanding of the industry in the perspective analysis part.Because it is difficult to predict the solution actually selected by the company to solve current problem.Therefore,only qualitative analysis can be done in the aspect of prospect analysis.