Abstract: Market-oriented debt to equity swap is an important measure to steadily reduce the leverage ratio of enterprises and prevent major financial risks.At present,the implementation mode of market-oriented debt to equity swap is diversified.However,due to the unclear key elements and the unclear interaction mechanism between the elements,the project landing is less than expected.In order to explore the internal operation mechanism of market-oriented debt to equity swap,takes coal enterprises as the research object,based on the data collected from CNKI database,and uses Grounded Theory to carry out in-depth research.The research results show that the market-oriented debt to equity swap includes five key elements and 15 sub elements,including legal system,regulatory status,analytical decision-making,operational processes,and implementation effects.Among them,legal system and regulatory status are external factors,analytical decision-making,and operational processes are internal factors,and implementation effects are outcome factors.There are complex relationships among the elements,and the operational process are the most critical.The research results indicate that only when the government,banks,and enterprises regulate their own responsibilities,clarify controllable elements,pay timely attention to key links,continuously optimize key elements by improving the level of sub elements,and gradually form a driving force,can we truly achieve the goal of reducing leverage and stabilizing risks in a hematopoietic manner.