A Study On Financial Risk And Its Control Of Private Listed Companies

In this paper, we choose China’s private listed companies as samples, and did anempirical test on the impact of corporate governance on financial risk. The purpose of thestudy is provide some reference recommendations for the control of China’s private listedcompanies’ financial risks by improving corporate governance. Firstly, based on the domesticand foreign literatures and summarizes the financial risk and corporate governance relatedtheory, analysis the present situation of private listed companies’ financial risk and corporategovernance by using SPSS18statistical software and other tools. Found that China’s privatelisted companies’ financial condition is good on the whole, but the gap between differentcompanies is large and more and more enterprises are gradually falling into the financial crisis.The text also found that the situation of financial risk among different industries have somedifferences, in a few selected samples than larger industries, manufacturing can be broadlyrepresentative of the private listed company’s situation. In terms of corporate governance,private listed companies showed a formalized management structure, CEO duality iswidespread, executive incentive uneven level, shareholding structure presents "yigududa" andso on. Secondly, we made normative analysis and empirical research on the impact ofcorporate governance factors on the financial risk. This paper selects the2010-2012privatemanufacturing listed companies as samples, use Altman Z-value model to measure the levelof financial risk and as the dependent variable, use Features from the board, supervisor’scharacteristics, management incentive and equity structure the four dimensions to examinecorporate governance, then examined the correlation between the internal governancestructure and financial risk factors. The paper first carried out on samples of some of thevariables descriptive statistical analysis, and found some unreasonable private manufacturingaspects of the governance structure of listed companies. By Pearson correlation test, there iscertain draw multicollinearity among the variables, so turn to these variables into theregression model, and do the regression analysis. The results show that CEO duality, theproportion of the supervisory board shareholdings, executive compensation, the proportion ofmanagerial ownership, ownership concentration and equity restriction and financial risks hassignificant negative correlation; there was no significant correlation between proportion of thesize of the board of directors, independent directors, board of supervisors and financial risk.Finally, this paper combine empirical conclusions, given the corresponding recommendationsto private listed companies on how to prevent and control of financial risks by improvingcorporate governance.