Comparative Research On Financial Crisis Warming Model Of Chinese And American Listed Companies

The history of Chinese financial market is shorter than those of the U.S.,and researches on financial crisis warming model also refer to existing foreign research achievements. Among them, Z-score model, originating from the U.S.,is a widely approved financial crisis warming model, which is of high forecast efficiency and calculated easily. However the very model hardly explains financial situations of Chinese listed companies, because of economic system and accounting system gaps between China and the U.S. Therefore, the main purpose of the essay is to build a revised Z-score model that can forecast financial crises of Chinese listed companies, and then I will further analyze the influences, caused by accounting system difference of the two countries, on choices of financial variables in the model through comparing it with American Z” model.In the article, I mainly use related knowledge and theories on both Economics and Statistics, study Z-model and apply its derivation principle,modify financial variables included, and then build Z-score model that can be used to forecast Chinese listed companies. After that, I will do comparative researches on Chinese and American Z-score models in various ways, which contains comparative analysis of chosen variables and their coefficients in Chinese and American Z-score models, applicability analysis of Z-score models towards financial markets of both countries, forecast effect comparison of Z-score model on manufacturing and non-manufacturing listed companies, andanalysis on advantages and disadvantages of Z-score model and binary choice model.Base on comparative results of Z-score models, it can be concluded that Z-score model that fits the U.S. cannot be directly applied to Chinese listed companies due to economic system and accounting system gaps between China and the U.S. Some variables that can reflect financial situations of American listed companies hardly explain those of Chinese listed companies, for accounting methods of the two countries are different. And Chinese listed companies value profitability, in comparison with American. In addition, there is a similarity between two Z-score models of two countries, which is both of them can forecast financial crises of manufacturing listed companies more accurately than non-manufacturing ones. Finally, compared with binary choice model,Z-score model can be calculated easily and has similar accuracy of judging. In conclusion, for Chinese investors, Z-score model is an excellent financial crisis warming model of high reference value.