Research On The Causes And Countermeasures Of Debt Default Of Evergrande Group

The real estate industry has made great contributions to China’s economic development for a long time in the past.However,in recent years,with the adjustment of national policies and the impact of the COVID-19,the real estate industry has been greatly impacted.A large number of debt default events have occurred in real estate enterprises,including many leading enterprises.As a leading enterprise in China’s real estate industry,Evergrande Group has experienced a massive debt default event,which not only caused losses to creditors’ interests but also had a negative social impact.Therefore,this paper takes this debt default event of Evergrande Group as the research object,tries to find out the reasons for this debt default event of Evergrande Group,and gives some suggestions according to these reasons,to help Evergrande Group find ways to get through this debt default event,and to provide reference for other enterprises with similar problems.Taking the debt default event of Evergrande Group as an example,this paper first introduces the background and significance of the research,research methods and research status at home and abroad,and then introduces the relevant theoretical basis,including financial distress theory,debt default,agency theory and Z-score model.Then it introduced the basic situation of Evergrande Group and the debt default event,and found out the reasons for the debt default event of Evergrande Group in combination with the macro environmental factors and the enterprise’s own situation,mainly because the macro level real estate industry policy gradually tightened and the impact of the COVID-19 epidemic led to the decline of the industry’s prosperity;In recent years,the company’s profitability has been continuously declining,its debt scale has continued to expand,its debt structure is unreasonable,financing costs are high,and the speed of asset turnover is slow,resulting in tight cash flow;In terms of business strategy,the long-term use of high leverage business models amplifies the operational risks of the enterprise,while the diversification strategy carried out over the years has not been successful,leading to an increase in liabilities and unable to bring stable cash flow to repay debts;There are problems with corporate governance,leading to increased operational risks and the existence of tunneling by major shareholders.In view of the existing problems of Evergrande Group,some suggestions were put forward to increase promotion efforts,speed up capital withdrawal,peel off non-performing businesses,obtain funds,speed up the development of new energy vehicle business,improve the business model,reduce liabilities and introduce strategic investors,and improve the corporate governance structure.Other enterprises should grasp the national policy direction,formulate reasonable development strategies,optimize the corporate governance structure to achieve long-term development of the company.At the regulatory level,they should regulate the business model of the enterprise and pay attention to the moral risks of major shareholders,in order to protect the interests of small and medium-sized shareholders and other stakeholders,and maintain the stability of the financial system.