The Study On The Firm Characteristic And The Financial Distress Costs

Market economy is competitive and unstable.In the face of fierce competition,only the powerful enterprises can survive from market economic environment.Many enterprises may have trouble in financial distress costs or even into bankruptcy.This will seriously influence the development of enterprises, including the credit mechanism and the interests of securities investors, even may endanger the country’s economic security.Now the ST companies increase faster every year,which can reflect this problem.Now many scholars concern with this issues in the world. About financial distress costs,most of the domestic scholars concentrated on building the financial distress warning models and the formation mechanism.But the research on financial distress costs are relatively less and the definition of financial distress costs differences still exist.Firstly, this paper describes the concept of financial distress, financial distress costs.then I put forward the theoretical basis of this paper and explain from four aspects of the relationship between the features of companies and financial distress costs.I select the 2007-2012 A shares by the special treatment of the listing Corporation (ST) as the research sample.From the enterprise point of view,the paper focuses on the performance of the business.After the analysis of o corporate financial distress costs.I found that financial distress costs really exist.The results indicate that the firm characteristics and the financial distress costs have certain correlation.The research results have indicated:(1)Asset liquidity and financial distress costs are significantly negative correlation;(2)The collateral value of assets and financial distress costs are also significantly negative correlation;(3)The complexity of the debt and financial distress costs have a positive correlation;(4)The growth of companies is positively related to financial distress costs.We should be fully aware of the questions of the financial distress costs.It may influence on the development of China’s market economy and China’s securities.Then we should strengthen the study on financial distress costs, deal with and solve this problem.From the conclusion of the study in this paper, we put forward a series of effective recommendations to solve this problem.The companies can pay attention to the importance of firm characteristics,reduce the probability of financial distress, fully use the advantages of the listing corporation platform,optimize the financial structure of enterprises, improve the core competitiveness. When the Enterprises find its existing problems,and get rid of the financial distress problems.Then they can go on the track of healthy normal operation.