Empirical Study Of Financial Distress Causes And Countermeasures Of Chinese Listed Company

As an important and complex field of corporate finance, financial distress is so usual that many companies fall into it and they are even closing down. This makes this problem is very important and wanted to be researched. But its complexity also makes the progress slowing and the domestic research is far away to the abroad. Now many scholars try to explain its forming progress with normative and empirical studies and they have give some avdvice. However, there is some question in their research results, so this paper will do some more research about financial causes and countermeasures based on the previous studies.This paper studied the listed companies who were "specisl treatment"(short for ST) becauses of "unusual financial situation". Commentary on the basis of previous research, the paper chose113the new "ST" sample companies and113compared companies in accordance with the same industry and asset size from2004-2006. Then we compared their features three years before they were "ST" and made theoretic and empirical analysis on the causess of its financial crisis. After that, this article classified the113ST companies according to if they would get out of ST within two years, and we compared their features a years before and two years after they were "ST". Then we analyzed their financial distress countermeasures and made an empirical test. In the above empirical test, we selected indicators including solvency, operational capacity, profitability, capacity development, cash flow capacity, ownership structure, corporate governance structure and other characteristics of a total of seven categories of indicators. Analysis of test results showed that the causess of China’s listed companies’financial crisis included the agency relationship, irrational asset structure and equity structure; and the countermeasures to financial crisis included adjustment of asset structure, asset restructuring and adjustment of ownership structure. This paper suggested that the Chinese listed companies should reduce the debt, make business restructuring and foreign mergers and acquisitions, arrange reasonable ownership structure, reduce the agent cost and take some other measures which can response to financial crisis effectively to avoid it.