Research On Financial Distress Prediction Of The Listed Companies In Manufacture Industry In China

Because of the intensification of external competition and the faults in internal management, decision-making, etc., worldwide companies frequently appears financial crisis and failure phenomena. With China's accession to WTO and the deepening of economic system reforms, the competition that Chinese companies faced will intensify continuously. How to effectively predict the company's financial distress, in order to provide more accurate predictable information for investors, lenders, managers, auditors as well as other parties in capital markets, has become an essential and indispensable subject. Theory background of this dissertation bases on the inadequate in the financial distress prediction research up to now.Based on the financial data of listed manufacturing companies in China from 2001 to 2005,this dissertation mainly combines the normal research with the positive research ,such as archival research and comparative study, concepts exploration method, statistical analysis and principal components analysis method ,etc..This dissertation includes five chapters. Chapter one is the literature review of the financial distress prediction. Chapter two redefines the concept of financial distress, designs a sample. Chapter three outlines the empirical research notion and determines the original prediction variables. Chapter four establishes a financial distress model by using the principal component analysis approach. Chapter five tests the financial distress prediction model, analyzes the result,and then summarizes conclusion and shortage of this dissertation .This dissertation make some progress on research of object and choice of prediction dictators. Especially on the object of financial distress prediction, this dissertation breakthroughs the restriction of present study and makes a meaningful exploration. This dissertation redefines the meaning of financial distress through analyzing the relationship of its related concepts . We determine the scope of the financial distress company by introducing the audit opinion, inspecting the small profit and "big bath" suspects company, which breakthrough the restriction of defining financial distress company as ST(specially treated) company for its financial situation was abnormal. The examination result of the prediction model is affirmative to some degree.This dissertation shows the results as following. Firstly, to study the connotation of the financial distress for deep exploration is both necessary and possible. Secondly , principal component analysis has higher value in the financial distress research in China . Thirdly, the two phenomenon from the dissimilation of financial indicators and the decline of asset size still exists. Fourthly, forecast for different span should choose different variables even different model.There still lie deficiencies in this dissertation. The model deviation from material of different time has not been able to handle well. All original variables in the dissertation are obtained according to the financial reports without considering the non-quantification factors. We didn't test other model's validity using the same sample.