Case Study On The Financial Distress Of *ST Hemei Group

After many years of rapid development of our capital market,a lot of companies have already gone public.But good companies and bad companies are intermingled.Some companies don't have enough business management level,but in order to get more money,try their best to fight for market.After listing,they are easy to produce snub psychology.After the operation and management problems,they soon appear profit loss or even into financial difficulties,and finally delisted.But such a series of operations down,those innocent small and medium investors received the most damage.So,the financial position of public companies must be closely watched,especially those in financial distress.If they get into financial trouble,it can have a big impact on the company's share price and hurt investors.At the initial stage of listing,*ST Hemei's operating profit was declining year by year.After several years of imperfect management,multiple strategic transformation and blind expansion,it fell into financial difficulties.From the perspective of protecting the interests of small and medium investors,this paper studied the case of * ST Hemei's financial distress,aiming to provide some help for small and medium shareholders in their investment,hoping that they can have a deeper understanding of the financial situation of the listed company.At the same time,the author also hopes to help the listed companies find the origin of the problem,and then let them out of the financial difficulties or avoid the occurrence of financial difficulties.Based on the cash flow theory,principal-agent theory and corporate governance theory,the author has read a large number of literatures related to the causes of financial distress and solutions,and conducted an in-depth study on the financial distress of * ST heme by means of case analysis and comparative analysis.This paper finds the surface and deep reasons behind its financial distress.Specifically including the following points: first,the strategic level of the problem,decision-making errors,blind diversification expansion road;Secondly,the corporate governance structure is not perfect,which is manifested by the over-concentration of the shareholding structure,the omission of the board of directors and the virtual establishment of the board of supervisors;Thirdly,there are some defects in internal control.The main problems include the design of risk assessment system,control activity system and information and communication system.Finally,the problem of management,inventory,accounts receivable and other assets management is poor.External reasons are the impact of macroeconomic factors and fierce competition in the industry led to the decline in performance.In view of the reasons for the discovery,this paper draws some experiences and inspirations for other listed companies to refer to,and puts forward some personal Suggestions for the future operation and management of *ST Hemei,hoping to provide help for it to get out of difficulties.Specific measures include enhancing risk awareness,prudent investment,optimizing corporate governance structure,improving the effectiveness of internal control and strengthening financial risk control.