Study On Financial Distress Discrimination And Reaction Of Chinese Listed Companies

Financial distress is a special financial state of the company. The evolution mechanism of financial distress based on enterprise ecology brings to light that it needs a gradual and multi-reacting progress from the formation to the recover of financial distress. During the progress, the company in financial distress may show behavior characteristics different from that of company out of financial distress, and the study on which may contribute to catch the thread of thought to the financial distress systemically and entirely, and to recognize the nature of financial distress.Taking the event of distressed company being special treated as boundary to divide space-time, the study may be separated into two parts: one is the reaction of distressed company before being special treated; the other is the reaction of distressed company after being special treated. Compared with other studies on financial distress, the study on financial distress discrimination and reaction is a method system integrating the cause, form, control and recover of financial distress, which is interconnected with the evolution progress of financial distress. Thus, the basic framework of the study on financial distress discrimination and reaction may be conducted.The game analysis of the board of director governance and major shareholders based on benefit shifting and the Logistic regression analysis discover the fact that the board of director governance is an important factor affecting financial distress through normal analysis and demonstration analysis respectively. The outstanding test of financial index and governance structure index that is one year, two and three years before being special treated reflects that the distressed company and non-distressed company show totally outstanding difference in financial index, while the outstanding difference in some governance structure index. According to these characteristics of financial distress, a forecast model on artificial nerve net may be conducted directed to different industries at different phases.The study on control of financial distress lays emphasis on the asset reconstruction behavior by distressed company, reflecting the selection preference on asset reconstruction of distressed company. The study on recover of financial distress is directed to discuss the special event of rescinding ST, reflecting the characteristic and market effect of the behavior of rescinding ST.Through the systematic study on the discrimination and reaction of financial distress, an overall and detailed understanding about the existing and development of listed company in financial distress may be acquired. Thus, the policy suggestion is put forward accordingly, which may the basis for the supervision and control by relevant department.