The Empirical Research Of Financial Indexes Added EVA To Financial Difficulties’ Early Warning

In the tide of economic globalization, enterprises face more and more complexand uncertain factors. In this kind of situation, establish a set of financial earlywarning system reflecting financial status is an effective method for avoiding riskand reducing loss.In2010the SASAC has made EVA a key index to evaluate performance ofcentral enterprise controller, and replaced traditional ROE, which modifies theconcept of “Only to take profits but ignore the value added”. Obviously EVA indexis scientific and significant. This paper will regard this as the opportunity, based onprevious studies, continue the thought of EVA index innovation, graduallyintroduced three EVA indexes to construct three early warning models, through thecomparison of the empirical results, this paper will discuss EVA index to theinfluence of the early warning model effect. In addition, the related researches offinancial early warning are mostly from the angle of “Enterprise Management”, butthe enterprise is not a single operating body, it needs to interact with outsideenvironment, in the pursuit of benefit maximization, but also create for the society.At the same time, society builds fair competition platform, provides all kinds ofresources. So that from the social value of enterprise level to understand financialdifficulties is more in line with the actual circumstances of enterprise. So this papertries to analyze enterprise difficulties from the perspective of social value creation.This paper selects40new ST listed companies and45matching non-ST listedcompanies as the study sample in the year of2010. Based on the2007-2009financial data, build a financial index system plus EVA, and use Logistics regressionto establish three financial pre-warning models, it is respectively: Based on traditional financial index (ROE) model I; Based on the model EVA index model II;Based on EVA optimization index model III.Through the comparative analysis of models’ returned classification effect andprediction precision of test samples, find that model III works best, model II second,and model Iworst.Non-parametric test、Collinearity diagnostics and final Empirical results showthat:1) Compared with traditional financial index, EVA indexes have more strengthsin distinguishing ST companies and non-ST companies;2) EVA indexes possessstronger explanatory ability to judge whether deep in financial distress or not, so areindispensable variables in models;3) SEVA,first introduced into the empirical field,proves to be the best financial index in warning effect, which confirm the attemptfrom “the angle of social value creation” to analyze enterprise financial difficulties.Meanwhile the enterprise tax level and financial difficulties probability arenegatively related to the conclusion.In a word, the financial indexes system added EVA to the effects of the financialearly warning is positive. So suggest: First of all, the listed companies shouldestablish financial early warning system based on EVA; Second, the government andfinancial regulators should further improve the capital market and informationdisclosure system; At last, the government can provide some appropriate policy、technology support according to the performance of tax obligation.