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Debt Restructure and Value Creation: Evidence from Chinese Debt-to-Equity Swap

ContributorsCui, Qifeng
Number of pages73
Imprimatur date2023
Defense date2023
Abstract

The market-oriented debt-to-equity swap (DES) as deleveraging means is being vigorously promoted by the Chinese government. This paper collects the 88 DES projects since the launch of DES in 2016 to the end of 2018 and gives a statistical description of the DES enterprises. We use the FN-CHK method to identify zombie enterprises, find that among the 74 DES enterprises with financial information disclosure, 19 enterprises are zombie enterprises. The bond market has given a significant negative reaction to the DES of zombie enterprises, which have reduced bond valuation by 1.961% during the [-30,30] event window period. In the stock market, the CAR of DES to private enterprise in [-5,5] window period is -17.24%. Despite the reduction in leverage, zombie enterprises fail to stop their business downturn while non-zombie enterprises exhibit substantial improvements in financial performance after DES. As current DES is unable to bring expected value-added effects in both short term and long term, we propose further efforts to be exerted in improving the efficiency of DES.

eng
Keywords
  • Debt-to-Equity Swap
  • Zombie Enterprise
  • Deleverage
  • Value Creation
Citation (ISO format)
CUI, Qifeng. Debt Restructure and Value Creation: Evidence from Chinese Debt-to-Equity Swap. 2023.
Main files (1)
Thesis
accessLevelPublic
Identifiers
  • PID : unige:177589
  • Thesis number : 0025
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Creation06/03/2024 12:30:01 PM
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