Researches On Early Warning Of Investment Risk Based On The Finacial Failure And Financial Distortion

Securities market is an information market to some degree. Enough reliable information is the basis of an effective securities market. Disclosure of accounting information is one of the most important information disclosures in securities. Investors can evaluate some securities and make good investment decisions by analyzing the financial and operational condition and future growth of some listed companies according to the disclosed public financial information. It is common sense that the disclosed public financial information often leads to investors'decisions.Because of their poor reading skill or great information searching cost, investors may face two kinds of risks when they interpret financial information of listed companies. From the aspect of listed companies'quality reflected by financial reports, it is financial failure risk. From the aspect of the reports' authenticity and reliability, it is financial distortion risk. It is very important theoretically and practically that these two kinds of risks are analyzed and effectively controlled.There are many literatures about the financial failure alarm, such as Altman's Z model, Logit model, neural networks and recursive partitioning algorithm so on. The researches of the financial distortion early-warning are carried out relatively late. The literature is relatively fewer. Empirical research in China is still in its infancy. Two studies out of touch each other, and lack of the necessary integrated research.The purpose of this paper is to analyze the financial failure and financial distortion faced by investors when they read and interpret the financial reports of listed companies. In order to do this, this paper is organized according to the following logic order from such aspects as theory, model and application.The research background of this thesis is discussed firstly. We reviewed the theoretical research related to financial failure and financial distortion alarm at home and abroad. Based on this, the issues in this paper are proposed. From the point of view of investors, the investment risk based on the analysis of accounting information is descripted. We put forward this risk base on the analysis the relevance of accounting information quality and reliability requirements. Then we talk about the difficulty of realization of accounting information value and the formation of investment risk. The dual investment risks warning based on financial failure and financial distortion is proposed.We selected for 40 financial indicators (such as solvency, cash flow etc), and 23 non-financial indicators (such as capabilities of corporate governance, market information). For a total of 63 dimensions of indicators, three models for warning of financial failure and financial distortion and dual investment risk are built and soluted by using the new data of listed companies. We found that the introduction of non-financial indicators contribute to the improvement of the accuracy of early warning. In order to overcome the problem which accuracy of traditional methods is not high for the financial distortion alarm, we chosed model which combined rough set method with neural network for early warning, and achieved good results. Based on the results obtained in the early research, Dual investment risk warning model is built. Its applicability and accuracy is stated.Finally, we talked about how to use the theory of risk analysis. A game model including investors and listed companies is established in order to get more insight. Some countermeasures and suggestions are given.The main original results are of the following:We study the relationship between the investment risks and the information of listed companies. Mothod of dual-investment risk warning analysis based on financial failure and financial distortion is proposed. It improves theories of financial early warning. Dual-investment risk warning model is established. It verifies the above ideas and provide us with a model which riched in value of practical application. It gives investors a good method of comprehensive analysis and response. The Two-dimensional game theory is used to obtain some new insights. Some of these insights can be used by financial information user, such as investors.