The Study For Listed Companies Financial Distress Prediction Based On Proportional Odds Model

In the fierce market competition, enterprises face many unknown risks, in orderto ensure the normal operation and development of enterprises, risk prevention andcontrol needed for the operation to become business concerns, including riskmanagement to control financial risk is the key. Corporate financial distress is adynamic process, and gradually produced, until the development of deteriorating.Ifwe can find the signs of the crisis and making the appropriate emergency managementwhen financial distress occurs early, it is useful to enterprise and the variousstakeholders. Therefore, to find and establish effective financial distress predictionmethod is very important. There are many researches related to the financial distressprediction, and achieved good results, which cox survival analysis models for theirability to predict a good dynamic, widely used in financial distress prediction, butindividual risk is highly homogeneous, cox model not suitable. This article attempts toprovide an alternative model of proportional odds model analysis of early warningresearch for financial survival, proportional odds model for survival analysis model iswidely used in medicine, social sciences, biostatistics, engineering and other fields,but in the financial early warning research has not involved.This paper first reviews the current situation on the financial plight of studyabroad, and then expounded on the traditional research model of financial distress andsurvival analysis model to analyze the advantages and applicability of the modelcompared to the traditional survival analysis models. The introduction of analternative model of survival analysis-proportional odds model, and apply it to ourcorporate financial distress early warning and forecast, according to the marginallikelihood and alasso variable selection process to determine the main factors andtheir parameter estimation, investigated ability to judge the proportional odds model,comparing cox model to predict the effect of proportional odds model, found that theproportion odds model similar to cox, have better dynamic predictive ability to show the plight of the development process, indicating that the proportion of the advantagesmodel can be applied to financial distress prediction.