A Case Study On The Motivation And Implementation Effect Of Debt To Equity Swap In Anhui Construction Engineering Group

Against the backdrop of a severe global economic downturn and a gradual slowdown in economic growth,my country’s non-financial enterprises,especially state-owned enterprises,have fallen into a situation of excessively high asset-liability ratios and are burdened with heavy debt pressures.The high financial leverage ratio also limits the The enterprise develops further.In order to reasonably reduce the leverage ratio of enterprises,the government put forward policy requirements for deleveraging,which led to the emergence of supply-side reforms.In 2016,the State Council issued the "Guiding Opinions on Market-Based Bank Debt-to-Equity Swap" for the second time,proposing market-based debt-to-equity swaps.Market-oriented debt-to-equity swaps shall be carried out on the principle of marketization.By converting creditor’s rights into equity,it not only relieves the heavy debt pressure of enterprises,promotes the healthy development of enterprises,but also helps banks reduce non-performing loans,so as to promote the stable development of the society as a whole.As a large-scale state-owned construction enterprise,Anhui Construction Engineering Group has been developing continuously,but its high asset-liability ratio has restricted the normal development of the enterprise,and finally made the enterprise move towards a market-oriented debt-to-equity swap situation.This paper mainly adopts the method of case study,selects Anhui Construction Engineering Group Co.,Ltd.（hereinafter referred to as Anhui Construction Engineering Group）,and explores the impact of the debt-to-equity swap on the company by analyzing and comparing the performance changes before and after the company’s implementation of the debt-to-equity swap.This paper mainly analyzes the motives of Anhui Construction Engineering Group’s implementation of debt-to-equity swaps and the specific plans implemented,and then uses the event study method to explore the short-term performance of the debt-to-equity swap on the company,and the financial indicator method to analyze the long-term impact of the debt-to-equity swap on the company.performance impact,and finally draw the following conclusions: the market-oriented debt-to-equity swap has a poor short-term impact on the company;the market-oriented debt-to-equity swap has significantly reduced the asset-liability ratio of Anhui Construction Engineering Group and enhanced its solvency;long-term analysis of financial indicators From the point of view,the profitability of Anhui Construction Engineering Group has been enhanced,and it has good development prospects.Through the above conclusions,it can be seen that Anhui Construction Engineering Group’s market-oriented debt-to-equity swap has achieved initial results.In view of the research on Anhui Construction Engineering Group,targeted suggestions are put forward for the enterprise itself,and finally corresponding suggestions are put forward from the government and enterprises.At the same time,it is also hoped that the market-oriented debt-to-equity swap of Anhui Construction Engineering Group can provide reference for the development of other state-owned enterprises.