Author(s)

XiangYu Luan

Corresponding Author

XiangYu Luan

ABSTRACT

This paper takes Li Ning as the research object, analyzes the countermeasures of financial distressed enterprises, and explains it from the perspective of property rights and government intervention. This paper finds that in order to deal with financial distress, companies need to conduct corporate governance restructuring, strategic and operational restructuring, asset restructuring and financial restructuring from a global perspective. In the reorganization, state-owned enterprises are more inclined to adopt non-marketization means such as related party transactions, while private enterprises pay more attention to the adjustment of company strategy and business strategy. The financial distress of state-owned enterprises should be significantly less costly than private enterprises. For financially distressed enterprises, government intervention is reflected in the “hand of support”. The “supporting hand” of government intervention is not only reflected in the soft budget constraints of state-owned enterprises, but also plays a role in private enterprises. However, investors' negative response to government intervention has led to the non-marketization of private companies' response to financial distress.

KEYWORDS

Financial distress, Private enterprise, Business strategy, Government intervention