| China's securities market has gone through 18 years, and the scale of the market is rapidly expanded. As China's economy has been moving towards market-oriented, the securities market has gradually become an important platform for Market allocation of economic resources. With the securities market's construction, development and improvement, and being a special cluster of Chinese companies and the foundation of the securities market, listed companies have achieved a substantial development and increasingly become an important part of China's economy. However, with the increasingly fierce market competition, coupled with various internal and external factors that can not be accurately predicted, China's listed companies have emerged a series of problems such as performance decline and the operation of low-quality. The risk of companies' failures has become an objective existence and increasingly prominent. By the end of June 2008, in the Shanghai and Shenzhen A shares, "insolvent" has 44 listed companies; And by the end of December 31, 2008, in Shanghai and Shenzhen, there were 153 ST or * ST companies, and 96 companies in third board market; during 2007 to 2008, there were also 25 listed companies to be suspended and not to restore listed qualifications.Listed companies' success or failure in operating performance has a direct impact on the vitality of the stock market. At current, listed companies have been falling and suffers from operating quality degradation, the lack of a solid internal foundation for the rising of share price index, investors lack of confidence on the market, so we are more concerned about what are the factors that affected the operation and management of listed companies, and even what caused the failure of the companies? How does it happen? The exploration of these questions which are observed in reality, apart from the question to ponder, has become the main topic of this article. Especially since the worldwide economic crisis in 1929 ,an unprecedented serious financial crisis between 2007and 2008 has swept the globe and deeply affected the Chinese once again, Chinese economy in transition, fledgling securities market and listed companies in China are accepting and experiencing an unprecedented test of the crisis. Although the global plan to rescue market is continually introduced and our country also introduced a 4-trillion rescue package, with the effects of the financial crisis intensified, the worsening external environment, and immediate measures to expand domestic demand in difficult circumstances, a lot of the performance of listed companies have fallen sharply, and many companies discontinue or reduce their production as a selection manner to tide over their difficulties. In the circumstances of serious financial crisis, the more serious situation of listed companies has been on the horizon. Therefore, undertaking a study to the failure of listed companies, based on current reality has become an urgent requirement. Through the research in this area, listed companies can improve the conditions of the preservation and rational use of the necessary resources for future development, avoid or reduce losses, and lay the foundation for successful operation. This also will help investors and other stakeholders in our country judge and evaluate the real situation of listed companies to prevent a risk of failure. Of course, as a warning, it also provides other emerging Chinese enterprises with a useful reference.The method used in this thesis combined theoretical analysis and empirical analysis, qualitative analysis and quantitative analysis, normal analysis and position analysis, international experience and domestic cases. This paper adopts the research thinking in the following:Chapter I: Introduction. In this section, there are thesis topic and its significance, the basic assumptions, research methods, research ideas and framework arrangements, etc.Chapter II: Literature review: Theoretical study on the failure of enterprises. In this chapter, this paper tries to carry out comprehensive theoretical overview, evaluation and analysis from the definition of business failure, as well as various theories to explain factors of corporate failure.Chapter III: Phenomena description: Analysis to the characteristics of the failure of China's Listed Companies. This chapter first defines China's listed companies' failure, and then carries out analyses on their characteristics from industry distribution, geographical distribution, asset size distribution, time distribution, lasting time distribution, failure path and financial characteristics, etc, and gives the risk warning conclusion.Chapter IV: Analysis on external factors of listed companies' failure. This chapter firstly gives the distinction between general and special influence factors, and makes a theoretical description on external factors of listed companies' failure, and then carries on the real diagnosis examination and the analysis to correlation factor's influence.Chapter V: Analysis on internal factors of listed companies' failure. This chapter firstly also gives the distinction between general and special influence factors, and makes a theoretical description on internal factors of listed companies' failure. On the basis, this chapter carries on the real diagnosis examination to and the analysis to listed companies failure from financial and corporate governance angels.Chapter VI: Root reasons cause the specificity of listed companies' failure: Excessively over-estimated to the value of listed companies. This chapter first carries out the economic analysis to listed companies value's formation. On this basis, it is proposed that the root reasons of listed companies failed particularity lie to be excessive overestimation to the resource value, and given theoretical analysis on the reason why it exists over-estimated to listed value.Chapter VII: Integrated governance measures to the failure of China's listed companies. This chapter mainly proposes the governance measures from the government and listed companies themselves angles.Chapter VIII: Conclusion. In this paper, this chapter summarizes the main conclusions, and explained this paper's research characteristic, the deficiency and the following research tentative plan.The most important feature of this study are all the studies will be placed in a specific Chinese policies and systems background, to study the characteristics and impact factors of the failure of listed companies ,and to do a new depth on their root causes of particular problems. Comparing to other studies, the study of this article is more comprehensive, deeply and meticulously. Innovative conclusion manifests in the following areas: First, the characteristics and specificity of China listed companies' failure are summarized and emphasized. This article emphasizes the characteristics and its specificity of the listed companies' failure on the base of profession, region, property scale, the going on market time, lasting time, failure's way and so on.(1) The listed company unable to pay debts with their assets has not been able to enter the bankrupt procedure. Although at present many listed companies have already been unable to pay debts with their assets condition actually, but there hasn't been one listed company entering the bankrupt procedure. (2) Most of the failed companies are those what were listed before 1997. This is our country stock market's special and the specific phenomenon. This is close correlation with our country stock market's initial period establishment goal for the state-owned enterprise to fund and the system difficulty. (3) The phenomenon of our country stock market's "Once listed, then change face" sometimes occurs. More listed company failed between 4 years and 10 years, although many carried massive funds which the outstanding share collects, even have big development plan. Their defeat occurs actually in initial listed time and the ambitious period of expansion. Many listed companies actually didn't take advantage of going on the market and the fund east wind to develop rapidly. They had actually entered the defeat region of losing money continuously and even guarantying the shell in the short time after circling money. This article believes that, above phenomenon's appearance, the fund bottleneck no longer is its primary cause, but should seeks the explanation from the enterprise's wrong financing idea and preferences as well as the stock market institutional flaw aspects.Second, this paper summarized the specificity of external factors which affected the failure of listed companies. From the external environment, the impact factors of listed companies operation contain economic cycle fluctuation, macroscopic policy and industry restructure, governance and legal environment, market operation and competition, etc. What is more special, because of their qualifications of the market transaction and the direct financing, the government also had to carry out special managements to distinguish from non-listed companies. In the failure process of listed companies, the systems defects of China' national conditions have a more prominent role, and become the special factors from non-listed companies. These defects include improper location of the early stock market, nonstandard rules of market access, exit, and supervision, excessive consideration of the government will, and so on. Systematic risks lead to failure of listed companies afterwards.Third, sum up the specificity of the internal factors that cause the failure of a listed company. Generally, the internal cause of a company can be found from the enterprise's core competitiveness, corporate governance and decision-making, the main industry and the diversification of operations, the capital structure, cash flow and the corporate integrity and so on. However, through the analysis of the failure of China's listed companies, it is very special that a large number of cases exist that the major shareholders' "hollowing out" acts have lead to the failure of listed company. The "hollowing out" actions have been a typical characteristic of the major shareholders of a listed company. The phenomenon is common that the major shareholders of a listed company improperly use a listed company, which has also become the most unique, different and key factor in contrasting China's listed companies and non-listed companies. The existence of defects of the stock market system, such as the position of the stock market, the asset stripping of restructuring mode, the system of market access and getting off and the regulatory issues, creates the "blood relationship" and the special handling relationship among a listed company, the controlling shareholders and the local governments. It is just this relationship, the controlling shareholder and local governments in order to maintain the continued operation of the parent company and the local economic and social development, natural has the" emptied "motives to transfer a listed company's resources.Fourth, this paper argues that the uniqueness of a listed company's failure roots in the overvaluation of a listed company. In our country, comparing to non-listed companies, because of the listed qualifications, the value of a listed company's resources contains some over-value, including amplification, low-cost capital financing advantages, the advantages of information, the image of publicity, policy preferences and the advantages of mergers and acquisitions and so on. However, in China's stock market, these values were overvalued so highly that it has lead to a large number of phenomenon competing for and improper using a listed company's resources, and even abusing the resources. And the expansion of these acts has greatly accelerated the Speed of the failure of a listed company. At this stage, the reasons to the over-estimated value of a listed company are mainly due to the following. The listed resources' profitability causes the need for the resources of a listed company. The improper positioning in capital markets and control of qualifications leads to shortage of listed resources and the supply. And the shortage of listed resources supply has been increased by the preference of equity financing, the need of the government's performance and the enlarged "tunneling" under the loopholes of the market control. So the competition for resources becomes more and more intense, which finally causes the highly over-estimated value of a listed company, and just these behaves increases the phenomenon of the failure of a listed company.Fifth, in a series of the comprehensive management measures to the failure of listed companies, and in view of the specificity of the failure of listed companies, we think that the government securities market should accurately adjust the position, control effectively the violent fluctuations in the economy. Especially, the government should improve the legal and regulatory to focus on raising the cost of improper using the resources of listed companies much higher and increasing penalties, and also promote listed companies and major shareholders to strengthen self-regulation and ultimately realize the effective allocation of resources.
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