Restructuring Strategies of Chinese Firms in Distress: Are They Value Enhancing?

38 Pages Posted: 22 Jun 2006

See all articles by Amy Kam

Amy Kam

City University London - Faculty of Finance

David B. Citron

City University London - Sir John Cass Business School

Yaz Gulnur Muradoglu

Queen Mary University of London; City University London - Sir John Cass Business School

Date Written: June 20, 2006

Abstract

We investigate the valuation effect of 303 hand-collected restructuring announcements made by 100 distressed listed companies in China and provide insights on which restructuring mechanisms enhance value in this emerging market context. Asset restructuring is the most popular strategy. In the light of difficulties in officially liquidating economically unviable firms in the Chinese context, asset restructuring provides asset mobility essential for an enterprise economy. M&A is value-enhancing only for non-State Owned Enterprises. In addition, asset sales are not perceived positively by the market. Our overall conclusion is that the stock market perceives that government ownership has a negative impact on companies' distress-resolution strategies.

Keywords: distress resolution, China, SOE, event study

JEL Classification: G34, P27

Suggested Citation

Kam, Amy and Citron, David B. and Muradoglu, Yaz Gulnur, Restructuring Strategies of Chinese Firms in Distress: Are They Value Enhancing? (June 20, 2006). Cass Business School Research Paper. Available at SSRN: https://ssrn.com/abstract=910606 or http://dx.doi.org/10.2139/ssrn.910606

Amy Kam (Contact Author)

City University London - Faculty of Finance ( email )

Cass Business School
106 Bunhill Row
London, EC1Y 8TZ
Great Britain

David B. Citron

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom
+44 207 040 8665 (Phone)
+44 207 040 8881 (Fax)

Yaz Gulnur Muradoglu

Queen Mary University of London ( email )

Francis Bancroft Building
Mile End Road
London, E1 4NS
United Kingdom

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom
+44 20 7040 0124 (Phone)
+44 20 7040 8853 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
273
Abstract Views
1,504
rank
120,169
PlumX Metrics