The Research On Financial Distress Cost Of Chinese Public Enterprises

Market economy is competitive and unstable. Enterprises must go through survival of the fittest in the market economic environment and the serious competition. Recently, with the development of the global economy, market competition becomes more and more serious. The external-environment that the enterprises face becomes more and more complex and various. Therefore, due to various reasons, a large number of enterprises may have trouble in financial distress cost or even into bankruptcy all around the world. On one hand, it may cause the great loss for the enterprises, and on the other hand, it may have a bad influence on the economic society. Under this background, the financial distress cost becomes a hot topic for scholars both aboard and at home.First, the thesis defines the definitions of the financial distress and distress cost, and introduces the relative theories about financial distress cost. Then the thesis chooses A shares of the stock markets of Shanghai and Shenzhen which are specially dealt from 1998 to 2009 years and those whose special dispose are dropped out before the June, 30, 2010. The thesis selects some variables and does some research on the financial distress cost of public enterprises from economic performance view and equity value view. Then it can be found in the thesis that although the business performance becomes much better from the economic performance view but it can not well reflect in the equity value view of the enterprises. The investors equally share about 9.95% of financial distress cost in the period of financial distress. Based on the analysis of the financial distress cost of public enterprises, this thesis employs the Multivariate linear regression method to analyze the factors that influence the financial distress cost of public enterprises and then find that there is a close relationship between the characteristic and the macro economic situation of the enterprises. From the above conclusion, the thesis puts forward some suggestions about how the public enterprises deal with and prevent the financial distress cost, in order to make an inference for the public enterprises to get out of the financial distress and reduce the financial distress cost. Since then, it may promote the healthy development of public enterprises and realize the most optimum distribution of the social resources.