Research On The Formation Reason And Contagion Of Debt Default Risks In Business Groups

With the development of financial market,debt financing has become the main financing channel for enterprises.However,as the bond market has grown in size,so have defaults.The bond market saw a wave of defaults in 2018-20.After sorting out the subject of default,it is found that many debt defaults with serious negative effects occur in group enterprises.In terms of the causes of debt default,group enterprises are more prone to debt default risk than single enterprises because of the complexity of guarantee and fund exchange among group member enterprises.In terms of the consequences of debt default,the debt default of one part of a group enterprise will infect other parts through the internal relationship network,and even spread to external related enterprises,lending banks and other financial institutions,resulting in a more serious negative impact than that of a single enterprise.This paper adopts the case study method to study New Hualian Group.The specific research questions are divided into two parts,namely,the formation reasons and contagion paths of debt default risk of group enterprises.Firstly,by combing the research results of past scholars,it is found that the causes of debt default can be divided into external factors and internal factors for analysis,and internal factors can be divided into strategic policy and management ability.Secondly,it analyzes the internal capital market,complex network theory,domino effect and other guiding theories,and draws the conclusion that negative events such as debt default in any member company of the group will affect other member companies in the group through direct or indirect ways.After that,it analyzes the case company Xinhualian according to relevant theoretical guidance.In the case analysis of the main content,the first analysis of new Hualian Group debt default causes.Based on the sequence from external factors to internal factors,from strategic policy to management ability,this paper explores the causes of debt default of New Hualian Group layer by layer.Second analysis of new Hualian Group debt default contagion path.Due to the frequent flow of funds within the group,the debt default of the parent company of the new Hualian Group was quickly infected to the listed subsidiaries.There are three main paths of infection,namely,productive connected transaction chain,internal capital lending chain and connected guarantee chain.The debt default risk first occurred by the parent company is transmitted to the listed subsidiary along three chains.Through the study of case groups,this paper clarifies the specific causes of debt default within group enterprises and the paths related to contagion,and draws inspiration from this,trying to provide suggestions on the prevention and control of debt default contagion for group enterprises in similar circumstances.In terms of default risk contagion,it is necessary to establish a risk prevention and control mechanism,focus on key enterprises,and cut off the risk contagion path of relevant debt in a timely manner.In the aspect of enterprise management,we should pay attention to the main business and timely exit from the field that cannot reflect the synergy effect.