Research on governance and market effect of listing corporation debt restructuring: Based on the Angle of moral hazard

Debt restructuring of listed companies is easy to cause risk of moral hazard and adverse selection. We choose all non-financial of A-share stocks which actually restructured debt in 2007-2009 as our samples. Through empirical research on financial situation before and after the restructuring and the motivations, we find that debt restructuring will improve corporate governance performance in the short term, while long-term effect is not significant. The main motivations of the reorganization are improving the financial position to reduce the debt burden, smoothing profits to manager earning and to avoid being delisted. In addition, we consider the market reaction of debt restructuring from the perspective of investors. Using the Fama-French three factor model to calculate the excess return rate yielded before and after the announcement, we find that debt restructuring announcement failed to maintain sustained rise in stock prices.