Study On The Resolve Mechanism Of Enterprise Financial Distress

According to the "Report on Monetary Policy " released by the People's Bank of China,the first quarter of 2011 began to change the monetary policy from moderately loose,which is kept from the fourth quarter of 2008,to prudent.Subsequently,a large number of corporations in Zhejiang,Jiangsu and other provinces appear a sign of financial deterioration.To financial distress enterprises,tight monetary policy makes their recovery more difficult,some enterprises even go broke,while others still can get rid of difficulties.As a flu attack,some patients' condition will be worse,and even go away,but some patient' situation can improve,which reflects the differences on internal control immune system of dilemma enterprises.Choosing a sample of listed companies in A-share market which is in financial risk during 2006 to 2014,this paper tries to examine the the influence of the fluctuation of monetary policy and internal control immune system on the dissolving the financial risk of listed companies,the results are as follows:(1)there is a negative relationship between the tightening monetary policy and the resolve of corporate financial risk,namely tightening monetary policy is harmful to the resolve of corporate financial risk.And for non state-owned enterprises which is enduring financial risk,tightening monetary policy has significantly adverse impact on its resolve,while for state-owned enterprises,the adverse impact is not significant.(2)Good internal control can effectively alleviate the adverse effects of tightening monetary policy for non state-owned enterprises.At the same time,in order to control the effect of the recombination behavior,this paper divided the sample as the recombination behavior sample and the non-recombination behavior sample,then regress respectively,we found that tight monetary policy has significant adverse effect on the enterprises without recombination behavior.Good internal control immune system can effectively alleviate the adverse impact of tight monetary policy on non-state-owned enterprises.Furthermore,this paper makes descriptive statistics analysis on the path of monetary policy and internal control system affected on the resolving of financial risk,it shows that when the monetary policy is tightened,enterprises' financing cost increases and financing scale decreases;good internal control can help companies get more financing at lower cost,and this effect is more obvious in non-state-owned enterprises.The contributions of this paper are as follows:(1)It enriches the literature about the influence of monetary policy fluctuation on the financial distress risk of enterprises,while the existing literatures have paid attention to the impact of monetary policy on corporate financial distress risk,but only discusses the effect of monetary policy on enterprise;(2)The framework of macro-micro impact on corporate behavior is initially established,and the financial distress risk can be resolved from macro-microperspective.The existing literature mostly discusses how to get rid of the financial dilemma from the perspective of corporate governance,even if pay attention to the impact of internal control,nor put the internal control in the macroeconomic environment.This paper regards the internal control as the enterprise immune system,and discusses how the immune system can play a "cure" function when the macro monetary policy fluctuates.