An Empirical Study On The Financial Crisis Prediction Of Listed Companies In China

BACKGROUNDIn order to promote the optimal allocation of social resources, each firm must accept the law of competition in the market. Since the Shanghai and Shenzhen Stock Exchange has put into operation, in order to standardize the behavior of listed companies, to protect the interests of investors. Regulators and exchanges have developed a series of laws and regulations to implement notification alerts on the shares of listed companies have been in financial Crisis. These poorly managed listed companies face delisting risk, caused by the loss to stakeholders.Therefore, the effective assessment of the financial health of listed companies, scientific prediction of the listed companies face the possibility of financial Crisis, has practical significance. Financial Crisis prediction model to provide the appropriate basis for decision making for different stakeholders:managers of the company’s Network access, to prevent the company into a financial Crisis; the company’s creditors on the company’s credit assessment, to guard against credit risk; help investors to make rational investment decisions, and to avoid investment risks.MAIN CONTENT AND VIEWThe main content of the thesis contains following parts:Chapter one is introduction. Described the background and significance of the study, review of the definition of the financial Crisis at home and abroad, and domestic and international financial Crisis prediction literature are reviewed. The empirical studies of this paper focus on those were special treated (ST) listed corporations.The second chapter describes the theory and methods of prediction of the financial crisis.Interpretation of the causes of the financial Crisis, combing the normative research theory of financial Crisis forecast.Then focuses on the empirical research of financial crisis forecast, and for the pros and cons. Univariate analysis, multiple discriminant analysis (MDA), logistic model, artificial neural networks (ANN) are the most popular methods employed in the study of financial discuss.Reviewing of the literature, many new techniques emerged, especial after the ANN was introduce into the field. But till now, it is logistic and ANN that accepted the most researchers.The third chapter is a descriptive statistical analysis of China’s listed companies’financial crisis. Use non-financial data, descriptive statistical analysis of macroeconomic, industry and corporate governance of listed companies’ financial Crisis.The descriptive statistical analysis provides the basis for the corresponding normal samples as controls for the forecast model, and provides a reference for selection of non-financial indicators for the prediction model.The fourth chapter is the empirical research part of this article logistic regression prediction model. The source of data for this study, the sample selection method, screening of indicators are being introduced, as while the process to establish and test the model.36ratios concerning solvency, profitability, operational capacity, cash flow, ability, capacity development, the level of risk and corporate governance composed the primitive indicator series. Selection was done with nonparametric difference test, correlation, and then by the regression step by step.Total assets of the net profit margin, asset turnover (long-term, short-term and total assets), and cash flow ratio and debt protection rate were include in the final model, which was tested by the original sample and another independent sample.The accurate rate drew from the initial sample test is76.03%. And the independent test indicate the model has ability of discrimination as much4years prior to Crisis. The prediction accurate rate is85.7%2years prior,83.6%3years prior and69.4%4years prior.Chapter five tells the conclusions and recommendations of this article. This chapter concludes the study in this paper, makes seveal recommendations to strengthen our company’s financial Crisis forecast, and prospects future research.Conclusions drawn are as follows. Financial ratios, released by the listed corporations, include effective information. Model can be established based on the aggregate corporations. Total assets of the net profit margin, asset turnover (long-term, short-term and total assets), and cash flow ratio and debt protection rate has evident prediction ability for financial Crisis.CONTRIBUTIONSBased on the previous researches, the author modified the research process and made some progress.(1) Use non-financial data, descriptive statistical analysis of macroeconomic, industry and corporate governance of listed companies’financial Crisis.(2) Data collection problems found in previous researches was revised.(3) T test was replaced by nonparametric method in difference test.(4) Test the model with an independent sample.