The Construction Of Early-warning Model Towards Liquidity Risk In Important M&A For TLC

Why does TLC cause serious liquidity risk after its acquisition of SQM? Is the outbreak of its liquidity crisis due to its managerial overconfidence in M&A decisions? How to help TLC to give an early warning of the liquidity crisis to a certain extent? Studying these three questions above is helpful for TLC reducing the possibility of a liquidity crisis in the next important M&A.Therefore,the purpose of thesis includes two aspects,in which,one is the analysis of the major cause of the liquidity crisis by TLC in the M&A,and the second is the solution that provided according to this cause to a certain extent.In view of the reason for the outbreak of liquidity crisis,this paper puts forward that managerial overconfidence is the root cause through analyzing the valuation and pricing of the assets that TLC purchased and based on that,self-serving attributions method,executive relative compensation method and financial index analysis method are used to conduct quantitative and qualitative analysis on managerial overconfidence.In view of the financial performance of managerial overconfidence,this paper builds an early-warning model.The early-warning model has purposes or significance that on one hand,reduces the degree of their solvency or the level of profitability overestimated by TLC managers,helping prevent or reduce its overconfidence in the next important M&A,and on the other hand,the model has certain applicability to the peer enterprises at the same development level with TLC.Based on this,the process of constructing the early-warning model mainly needs to solve four problems.First,in the training set of sample size limitations,due to the paper belongs to the case study,the paper uses K-Means clustering to extract peer enterprises that are at the same development level with TLC one year before purchasing and used for training model.Secondly,on the selection of early-warning indicators,the paper selects characteristic factors for liquidity risk as discriminant variables according to the cause of the liquidity crisis outbreak of TLC,which is the financial performance of managerial overconfidence.Thirdly,on the marking problem of the sample enterprise category value,the paper uses K-Means clustering to mark the enterprise sample as five groups of category variables reflecting different levels of financial status,so as to establish the quantitative relationship between category variables and discriminant variables by Bayesian discriminant method.Fourthly,the early-warning definition of category value is defined by analyzing the category value when TLC broke out liquidity crisis.In addition,in terms of the reliability and validity of the model,on the one hand,the paper uses the early-warning model to distinguish the financial status level of TLC one year before purchasing,and then compares it with the result of the category value of the sample used to build the model to explain the reliability of the model.On the other hand,the data of TLC two years after purchasing is used as the forecast data of the model,and then its discriminant results of the model are compared with the real financial status of TLC to illustrate the validity of the model.