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Debt restructuring guidelines change impact analysis of ST listed companies

Author: WangDongˇˇJieYanXia From: www.yourpaper.net Posted: 2009-10-26 08:50:20 Read:
Abstract: The first developed from the 1998 debt restructuring guidelines revised again in 2006 (revised in 2001 for the first time), the debt restructuring to return to the level of debt restructuring in 1998. This is much more than a simple regression. From the basic theory of debt restructuring, the use of ST companies in the past three years, the Shanghai stock market data analysis, we can see the significance of the debt restructuring guidelines change.
Keywords: debt restructuring; basic guidelines; specific guidelines


China's Ministry of Finance in February 2006 a new system of accounting standards (basic criteria and 38 specific guidelines). In fact, from 1995, the Ministry of Finance on the establishment of appropriate project team to proceed to develop a debt restructuring guidelines, and the debt restructuring guidelines (January 1, 1999 implementation in the country), first enacted in 1998. January 18, 2001, issued by the Ministry of Finance (2001) debt restructuring guidelines for the reorganization of the debtor's income is no longer included in the current profits and losses, and recognized as capital reserve. Practice the Foreclosed business (the transfer of non-cash assets or equity measurement attribute selection) from fair value to the introduction of the book value as a basis of measurement. The second revision of the system was implemented on January 1, 2007, returned to the accounting standards enacted in 1998 and revised in 2007 up. Faced with this situation, we can not help but will move to the following questions:
1. Exactly what causes repeated revisions of the debt restructuring?
Since the 2006 debt restructuring guidelines went back to the 1998 level, the 2001 revision of the debt restructuring guidelines whether there are practical significance or that the change is reasonable?
What the original intention of the 2006 debt restructuring guidelines revised by the Ministry of Finance? Its mind whether to now?

Second, the theoretical basis and review of the literature

The formulation of an accounting standards will inevitably have an impact on the economy, high-quality accounting standards, of course, would be better for the economic development of services. Mr. Ko Shu (1999) in line with the characteristics of high-quality accounting standards:
First, high-quality accounting standards, in theory, should be applied in the conceptual framework of financial accounting, basic consensus worldwide concept. Second, the principle of high-quality accounting standards shall comply with all quality requirements. The most important quality is relevance, reliability, comparability, fairness and full disclosure. Third, the reliability is the most important attribute of high-quality accounting standards. Fair and full disclosure is part of reliability. Country specific guidelines (in 1999 only 8, just from the number of point of view it is also can not meet the high quality standards require)
Debt restructuring guidelines promulgated in 1998, the Ministry of Finance, in line with the provisions of the International Accounting Standards, but there is a certain degree of arbitrariness not very mature determination of fair value due to the time of the property rights of production factors market, so there has been a large number of ST, PT's hat, Reaching for the Stars, and sometimes caused confusion in the market between the abuse of debt restructuring in order to obtain. Simon Kwok, Zhang Jie Fei (1999) that the debtor, creditors, debt restructuring occurs, regardless of the forum amount, should be disclosed because of the debt restructuring is not a normal business matters, and it is on the one hand show that the the debtor financial crisis facing liquidity problems; the other hand, that the liquidity of the assets of the claims of creditors and quality problems. These are the important information about the financial situation of enterprises, should be in the notes to the financial report reveals.
After 2001 the Ministry of Finance the debt restructuring revised guidelines provisions: the reorganization of the debtor's income is no longer included in the profit or loss, and recognized as capital surplus. Practice the Foreclosed business (the transfer of non-cash assets or equity measurement attribute selection) from fair value to the introduction of the book value as a basis of measurement. It played no small role in preventing corporate debt restructuring manipulate profits to ensure that the accounting information reliability does. Cheng Haiyan (2001): Overall, (2001), the comprehensive debt restructuring guidelines listed companies, true and reliable accounting statements in recent years and most of the blue chip companies is positive, inadequate accounting statements true or most of the the underperformance company, especially Class T is negative, increase the difficulty of the restructuring of listed companies such failed listed companies to exit the stock market in a timely manner.
Luo Wei et al (2008), the economic consequences of the 2001 debt restructuring, changes in accounting principles, research, empirical analysis of earnings management behavior of the reorganization of the company under the debt restructuring in 1999 and 2001, accounting standards and long-term performance of the company after the reorganization difference. The research results show that the debt restructuring accounting change in 2001 to suppress the use of debt restructuring revenue earnings management motivation, so that the reorganization of the company's long-term performance better.
Lu Jing (2005) using Lgoistic regression and linear regression methods, found that the listing of the company's debt restructuring behavior with Free delisted or allotment and eligible earnings management motivation and the 1998 debt restructuring accounting standards induced listed companies to adopt new profit manipulation means, thus proving that the accounting standard setters on debt restructuring accounting standards, amendments reason indeed established (2001).
2006 debt restructuring guidelines be revised once again, causing a lot of people worried, worried that "fair" phenomenon from happening again, the debt restructuring ST, PT listed companies to take advantage of the gain on debt restructuring stardom, Zhaimao. In fact, this is not necessary to worry about, as early as in 2004, the Shenzhen and Shanghai Stock Exchange for ST, PT listed companies stardom, Zhaimao, conditions were redefined after deducting non-recurring gains and losses, net profit is positive . Therefore, under this provision, the non-recurring gains and losses arising from debt restructuring will be directly deducted from net income. The Cheng Haiyan (2001) survey found: When blocked quick deficits through debt restructuring the PT companies to take capital reserve to make up for the loss countermeasures. Required by the guidelines of the 2006 debt restructuring Debt Restructuring Lee had to be credited to the capital reserve, at least at the level of debt restructuring to avoid the capital reserve to make up for the loss. Ministry of Finance revised Accounting Standards (2006), the main two original intention: to meet the actual needs of China's economic development, and the other is widely recognized by the international community. Accounting Division of the Ministry of Finance to co-operate with the relevant parties, "daily mark-to-market, and door-analysis", tracking analysis of a listed company's 2007 annual report, come to the following conclusions: (1) by the Accounting Standards for Business Enterprises the effective implementation of certain accounting policies, to help promote the healthy and sustainable development of enterprises; (2) by the Accounting Standards for Business Enterprises to form a true and complete financial reporting system, helps to promote sustainable investments of investors; (3) by the Accounting Standards for Business Enterprises international convergence and equivalent, laid the foundation and platform for enterprises to enter the international capital markets and investment. Shows that the original intention of the Ministry of Finance is basically reached. Third, the data analysis

ST as the analysis of samples collected by the Financial Research of Tsinghua University database and Shanghai Stock Exchange, Shanghai Stock Exchange 2007 debt restructuring. I believe that the debt restructuring changes are meaningful (for listed companies in terms of long-term good or bad), net profit of ST's debt restructuring in the subsequent years, whether consecutive positive. This is because the purpose of the debt restructuring is to allow enterprises to continue to survive as long as the profit is positive, then the hope that it will have to continue as a going concern. Assuming 1: If you get a lot of debt restructuring in 2007 profits ST companies, net profit is positive, Seoul annual operating results year after year after poor, even second-year net profit of some corporate profits is negative. Debt restructuring changes ST company what extent?
2007 a total of 41 listed companies in Shanghai Stock Market debt restructuring, the ST companies debt restructuring before profits total net profit in the last three years, 10 example: the ST Kimhwa 10, 2006 (consolidated) net profit of eight negative (in addition to build letter the ST Langsha and ST), 2007 (consolidated) net profit of all positive, 2008 (consolidated) net profit of 6 is negative (respectively, ST Kim, ST Yuen Fat, ST stone Zhuxin Da Nang, ST, ST long letter, ST Suntime). As can be seen, the top ten of the total gains of debt restructuring in 2007 net profit is positive to the part of the company in 2008 (6) net profit for the negative, visible performance gains of debt restructuring is not the profitability improvement.
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