An Empirical Research On The Index System Of Financial Early Warning Of Chinese Listed Manufacturing Companies

Financial early warning system is based on financial statements, business plans, relevant business information and external data collection, using a certain statistics and analysis method, informing business and other stakeholders the financial crisis, and analyzing the causes of financial distress and other hidden problems, urging managers to take early preventive measures, and providing manager the decision and control method. There are several reasons account for the financial crisis of Enterprises. In the past, the study of early warning is mainly based on the financial projections to predict the company's financial situation, due to the behind and restriction of the financial objections, the adverse changes of some companies can not reveal in financial objections soon, on the other hand, the range of non-financial objection is so large that select no theoretical support, with a more subjective.Therefore, how to build financial early warning system in a reasonable and effective way, how to make the combination of financial indicators and non-financial indicators, and how to make a choice between financial and non-financial indicators of financial early warning system in a pure way, become the new situation of financial early warning system.Based on the study of classical literature and research about the financial early warning system at home and abroad, to make a deeper inquiry into the "Financial Distress of Listed Companies in China industry research," both in theory and research, to list companies in China's manufacturing industry as the research object, selecting 82 manufacturing companies between 2007 and 2008 as a research sample, using ST's first two years' data, the 13 selected financial indicators, the introduction of non-financial indicators, including nine corporate governance indicators and three other non-financial indicators, using factor analysis and Logistic regression to construct four different indicators of financial early warning models, empirical research using SPSS 18 software.The results show that adding the non-financial indicators of financial distress prediction model based on financial indicators have more prediction accuracy and goodness of fit than simple financial distress prediction models, the prediction of listed manufacturing companies have some financial distress practical value.The empirical results show the following conclusions:1) By adding the non-financial indicators of financial distress prediction model based on financial indicators than simply financial distress prediction models to improve the prediction accuracy and goodness of fit, the prediction of financial distress of listed companies manufacturing has some practical value. The model has high prediction effect, the basic indicators used to reflect the company's investment activities and business conditions, and easier to access, has certain operational.2) The company's profitability and solvency play a key role in the financial risk profile of the company, either based on financial data alone or mixed and non-financial indicators of financial indicators of financial early warning model to establish the company's profitability and solvency have good explanatory power. Therefore, the operations of the company at any time should attach importance to the company's profitability and solvency, concern about their changes all the time.3) Because the analysis of the sample we used took place the company 2 years before the financial crisis, although the mere establishment of the financial indicators of financial early warning model has some explanatory power, some missteps made management actions have not reflected through the financial indicators .By adding non-financial indicators, the predict ability of financial early warning model has greatly improved, indicating that non-financial indicators have a good supporting role. Other financial indicators have indirect effects on the implementation of management decisions through the external environment, the governance of a corporate indicators affect the performance of the company primarily by affecting the company's financial condition, the indirect effects of non-financial indicators to enhance the model's predictive ability. Therefore, when establishing the financial early warning model, we should pay attention to the company's internal governance and external environment, and combine the company's financial information with them, establish a financial early warning models.However, although I have put a certain supplement and complete to China's listed manufacturing companies of the financial early warning, there are still some shortcomings, mainly for the major limitations of the sample, the choice of non-financial variables and the choice of these three threshold, in order to make further improvement and research.