The Relationship Between The Ownership Structure And The Change Trend Of Distress Of Chinese Listed Company In Financial Distress

Since the 1990s, many companies have been listed as ST or * ST because of deteriorated managements. It is a very critical period from falling into financial distress to terminating liquidation (or getting rid of distress) for the company in financial distress. And the future of the company is uncertain. How to analyze the financial distress degree of listed companies and accurately forecast their future trend is of importance because it is useful for the manager to improve management, for investors to decrease risk, for the bank to loan, for the government to supervise the capital market.This study mainly consists of three parts:ownership structure and financial distress trend and ownership structure and financial distress degree, the controlling shareholders'shareholding structure and their behaviors.Focus on these three parts, this abstract summarizes the research content, methodology, conclusion of this dissertation as follows:Firstly, in order to investigate the relationship between ownership structure and financial distress trend, companies which are in financial distress are categorized into two types:one turns better and the other deteriorates. According to principles of testability, inclusiveness and comparability, this study select indicator of ownership structure and financial factor, and establish the financial distress model by using Logistic analysis and the software of SPSS11.5. This study also introduces case analysis to test conclusions. And these conclusions as follows: the introduction of ownership structure variables is helpful to improve the accuracy of the financial distress trend model based on just financial variables. The increase of ownership concentration, state-owned shares, corporate shares is helpful for companies to get out of financial distress, and A high degree of the separation of control right and cash flow right is not helpful to improve the financial distress situation; a high degree in the ratio of earnings before interest and tax and debt, the ratio of working capital, growth rate of operating income, diluted earnings per share, turnover ratio of current assets, cash flow interest protection units, per share cash flow, cash recovery rate of total assets and net debt rate tangible is good to improve the bad situation of the companies; a high degree in the assets-liabilities ratio,the ratio of debt and equity market value, the ratio of net asset and book value is bad for the companies to get out of trouble.Secondly, in order to investigate the relationship between ownership structure and the degree of financial distress, this study comprehensively estimated the degree of financial distress by the method of factor analysis. And this method comprehensively considerate the solvency, growth, profitability, operational capability and the ability of earning cash flow of the company, so this study further the previous research, which measure companies' performance by one singe financial ratio. After comprehensively measured the degree of the company's financial distress, this study analyzes the data of ownership structure and financial distress degree by the method of Panel data analysis and Eviews software to investigate the relationship between ownership structure and financial distress degree. The study find some results as follows:the financial distress degree of state-owned company is more serious than non-national companies; the ratio of state share and circulation ratio have a positive correlation with financial distress degree; corporate share has a negative correlation with financial distress level; ownership concentration and financial distress have a negative correlation.Thirdly, the study analyzes the relationship between controlling stakeholders' ownership structure and their behaviors. Based on agent theory, the hypothesis of monitoring, tunneling hypothesis and propping hypothesis, this study constructs controlling shareholders' interests conveying theoretical framework by using qualitative and quantitive analysis method. And the theoretical framework systematically analyzes the following aspects:for controlling shareholders, the separation of control right and cash flow equity is the prerequisites of the interests conveying; long-term gain is the object of the interests conveying; related transactions is the way of the interests conveying. The study improves FRI model through mathematical analysis method. By combining the theory analysis and mathematical analysis, the study systematically analyzed the factors that influence behaviors of controlling shareholders, and proposed related assumptions. The study comes to conclusions by establishing a panel data regression model. The study also tests conclusions by case analysis. And results of this study are as follows:the support from controlling shareholders in state-owned companies is stronger than non-state-owned companies; the separation degree of control right and cash flow equity of large shareholders has negative correlation with their support, ownership concentration has a positive relationship with shareholder' propping behaviors. The innovations of the study are as follows. Previous studies only categorized listed companies into companies in financial distress and normal companies, they did not subdivide listed companies in financial distress, the study considers financial distress as a dynamic process and subdivided them into two classes—the one turns worse and the other turns better, then compared companies of the two types. The previous researches on financial distress mainly concentrated on setting up and optimizing financial distress model by comparing relevant financial indicators of normal companies and companies in financial distress, while the research on measuring the degree of financial distress is very few. This study proposes an indicator of financial distress by integrating multiple financial measures. The previous researches focused on financial indicators while overlooking ownership structure features, so this study examines the shareholder structure characteristics and relationship between ownership structure and the distress trend. The previous researches seldom touched upon the shareholders' behavior behind financial distress trend. This study constructs a theoretical framework of the interest conveying of the controlling shareholders, and further explore an inherence way by which the ownership structure of company influences the financial distress trend, namely, shareholder' behavior choice. The ownership structure of shareholders decides shareholders' behavior choice, and the behavior choice further influences the degree and the change trend of financial distress.