Research About Chinese ST Companies Based On Survival Analysis

In the early 1990s,Shanghai Stock Exchange and Shenzhen Stock Exchange were established successively,marking the formal formation of China's stock market.However,many companies had suffered from financial difficulties after their listing,so the Special Treatment(ST)system came into being on March 16,1998.Once a quoted company is specially treated,there are only two kinds of survival conditions in the future:one is to remove the hat(that is,to cancel the special treatment),and the other is to withdraw from the market.This paper studies the survival problem of ST companies by means of survival analysis.Specifically,the problem is the time rule of removing the hat and delisting,as well as the influencing factors of removing the hat and delisting.Survival analysis is an analysis of the possibility of an endpoint event taking place in one or more groups during the observation period of the study.This paper defines this endpoint event as removing the hat or delisting.Compared with traditional discriminant analysis or logistic model,survival analysis has incomparable advantages:it does not need paired samples,avoiding the problem of different results caused by different methods of selecting paired samples,and improving the robustness of the model;it is a dynamic research method,fully considering the fact that the risk rate changes with time;it can also use censored data to increase the number of samples.We use the life table method to study the time rule of removing the hat and delisting.We use Cox's proportional hazard model to study the factors affecting removing the hat and delisting,and use Schoenfeld residual test method to test the applicability of Cox's proportional hazard model.On the basis of the work done by predecessors,this paper studies the influencing factors of removing the hat and delisting of ST companies,and adds non-financial indicators such as the proportion of large shareholders,the number of shareholders,the proportion of circulating shareholders,the proportion of circulating shares,etc.This paper not only analyses the influencing factors of removing the hat of ST companies in the whole industry,but also conducts a pioneering sub-industry research on ST companies.Through the empirical analysis of this paper,we can draw the following conclusions:(1)After special treatment,the probability of removing the hat of quotedcompanies increases first and then decreases.It reaches the highest value in the first quarter of the second year after ST,and declines sharply in the third year.Few ST companies can remove the hat in the sixth year and later.(2)After special treatment,the probability of delisting of quoted companies increases first and then decreases,reaching the highest level in the third year after ST.Few ST companies delist in the fifth and later years.A few of them require to withdraw from the market actively within one year after ST so as to complete merger or privatization with other companies.(3)For ST companies in the whole industry,the factors affecting removing the hat are asset-liability ratio,total assets,large shareholder ownership ratio and circulating shareholder ownership ratio;for ST companies in the real estate industry,the factors affecting removing the hat are inventory turnover rate,operating profit growth rate,total assets growth rate and circulating shareholder ownership ratio;for computers,communications and other electronic devices,the factors affecting removing the hat are inventory turnover rate.,operating profit growth rate,total assets growth rate and circulating shareholder ownership ratio.For ST companies of equipment manufacturing industry,the factors affecting removing the hat are net sales interest rate and the annual growth rate of total assets;for ST companies of chemical raw materials and chemical products manufacturing industry,the factors affecting removing the hat are the annual growth rate of operating profits,the annual growth rate of total assets and the number of shareholders.(4)For ST companies in the whole industry,the factors affecting their delisting are net assets per share and EBITDA per share.According to our research results,the managers of ST companies in different industries can correctly rectify their companies,seize the opportunity to remove their hats and avoid delisting;investors in the market can more accurately predict the trend of stock prices and make correct investment decisions;the regulators of the securities market can more strictly and effectively supervise ST companies,and give risk tips to investors.