Listed Companies' Financial Crisis Early Warning Empirical Research

Traditional accounting is an activity that is carried out under the historical cost principle and objective principle to record the performance of a company during certain period of time, using various financial ratios. Those ratios are used to reflect the company's historical performance. As far as forecasting the future performance by using of past financial ratios is concerned , financial directors determine it by their own understandings in a rather subjective manner. Inevitably this would result in forecasting errors which in turn would bring losses to the company itself, the banks and investors as a whole. In this situation, it becomes even more significant to forecast the future performance of companies, especially when in financial distress, in an objective, systematic, scientific manner, by using of the combining knowledge of finance, econometrics and statistics. There is less research about it because it is difficult to quantitative analysis firm .This text reviews the domestic and international classics documents about financial crisis prediction. On the basis of the correlative research results, I choose of 36 ST Company and 36 ST Company from our country manufacturing listed company of stock markets of Shanghai and Shenzhen as sample of studying, and establish the financial index systems which contain financial indexes of 2002---2005 these 3 years of 72 listed companies. In the course of building the model, through normal and nonparametric tests, I choose 17 index as final index of model from 22 index at first, then concentrate these indexes into 5 factor variables through the Principal analysis, then set up the model of Fisher multivariate discriminating analysis and Financial crisis prediction by Logistic regression finally, in the same time examine the validity to the model .We can see the model can forecast the future four years.