Research On Identifying Factors Of Turnaround Effect Of Declining Enterprises

In environment of complicated market economy,enterprises face many uncertainties during the operation.Many enterprises may experience sustained or temporary decline.Some companies may achieve successful turnaround,while others may fail.The theory of turnaround believes that turnaround outcome can measure by performance and many factors may affect turnaround performance.Therefore,research on turnaround factors which are related to turnaround performance become a very necessary subject..This thesis focus on identifying factors of declining enterprises and studied the following three aspects: Firstly,provide the definition of declining enterprises;secondly,introduce enterprise turnaround theory and its identification factors;thirdly,empirically explore the correlation between the turnaround effect of declining enterprises and various identification factors.While build recognition prediction models.Based on the study of enterprise turnaround theory in management,this paper clearly defines and explains related concepts such as declining enterprises,reversing successful turnaround enterprises,and failed enterprises.Through the selection and processing factors,establish an ordered three-category logistic regression model and the inter-industry analogy analysis,an empirical analysis is carried out based on the Ashare manufacturing data to explore the turnaround effect and identification factors of the declining enterprises.In addition,several hypotheses of the theory of corporate turnaround are analyzed and verified,including:(1)whether the adoption of a retrenchment strategy has a positive effect on the reversal success of declining enterprises.(2)Whether the management changes of enterprises in the recession have a significant impact on the effect of corporate turnaround.Through the above empirical analysis steps,this paper finally establishes a prediction model for the turnaround effect of the recession enterprises with high recognition accuracy,and carries out the industry analogy analysis,and obtains the following views.The results show :(1)the reduction of the cost and assets of the declining enterprise can indeed be certain.To the extent that it strengthens the turnaround effect of enterprises,the retrenchment strategy has a positive impact on reversing success.(2)The effect of management change on the enterprise's turnaround varies from industry to industry and has a significant positive effect in the manufacturing industry.In the upstream industry,this may be related to the difference in the industry's business model.The recovery is often dominated by increased investment and the opening of new production facilities,which will lead to an increase in the level of fixed assets,which is less affected by such factors in the raw material supply industry.(3)By observing the cash flow indicator factor,the turnaround effect of the declining enterprise can be accurately grasped,and the value of some cash flow indicators has certain leading and predictive ability for the effect of the enterprise turnaround.