Research On The Early Warning Of Financial Crisis From The Perspective Of Enterprise Life Cycle

The problem of corporate financial early warning(FEW) has received much attention in the field of business and financial management in the past decades.It has serious adversary effect on which ranges from healthy development of enterprises,to the stabilization of capital market and even to the economic security of the whole country.The global financial crisis,started from 2008, has not only made many large companies go bankruptcy,but also caused lots of middle-and-small companies and investors to be involved in the financial crisis, which lifts the importance of early warning of corporate financial crisis to an unprecedented high position. Therefore, how to make the companies survive and develop is an urgent and key problem for the government, the society and the companies.Companies in different life cycle(LC) stages have different financial characteristics and face different environment, which makes the corresponding key factors and the mechanism of the occurrence of financial crisis are different.What’s more, they own different ability to deal with financial risks.As a result,the enterprise life cycle theory provides an important tool and a new perspective for the researches on FEW.Firstly, these literature about the concept of financial crisis, FEW models, LC stage division and the causes of financial crisis are reviewed, from which we can get to know the research status and their development trend. Secondly, the whole LC of the FEW index pretreatment methods are introduced and these two FEW models——the Kalman filtering and Logistic regression models are established, so as to realize the combination of static and dynamic early warning.Thirdly, from the perspective of corporate life cycle, based on the previous literature, this article systematically analyzes the deep-rooted reasons for the financial crisis and constructs FEW index system including common indicators and iconic index in the three stages of enterprise life cycle. Because the causes of the financial crisis of listed companies in different LC stages are different, we select three iconic indicators for the companies in the three LC stages.Then, though descriptive statistics, noise pre-processing, non-parametric tests, the standard normality conversion, the companies’observation data as filter input and the companies’real state as filter output, Kalman filtering model is established respectively in each LC stage. After that, the Logistic regression models including both financial indicators and corporate governance indicators are built.The results by Logistic regression of the three LC stages all show that the sensitivity and specificity of Model II are better than Model I.By longitudinal comparison,it is showed that:firstly,the specificity by Kalman filtering model is superior to that of Logistic regression model in the three stages; we can find that:firstly,the effectiveness of financial crisis early-warning between the growing and mature stage by Kalman filtering algorithm is almost the same,but the effectiveness by Logistic regression model in the growing stage is better than that in the mature stage. Secondly,the effectiveness of financial crisis early-warning in the decline stage by Kalman filtering algorithm is superior to that in the growing and mature stages,and it is the same with the effectiveness by Logistic regression model.Between the growing and mature stages,the effectiveness by Logistic regression model in the growing stage is also better than that in the mature stage.Finally,research on the suggestions.This article,according to the key influencing factors in the three stages..correspondingly brings forward some suggestions to help enterprises of all life cycles avoid the risk of financial distress and help stakeholders such as business managers, creditors and shareholders avoid the economic loss, which has great implications for a stable economic order of societies and the economic security of countries.The main innovation of this dissertation is as follows: ①Building FEW index systems including 21 financial indicators,8 corporate governance indicators and 3 iconic indicators in the three LC stages. Doing this not only provides a new train of thought for FEW indicator selection, but also, to a certain extent, it solve th theoretical basis and the integrity problem of FEW index system; ②integrating LC theory into the reseach on the FEW scientically in the three LC stages.On one hand, it tests and analyzes the key influencing factors and verifizes the question"corporate governance factors can help to warn the enterprise financial crisis ", on the other hand, it puts forward the corresponding policy recommendations to control the financial crisis in the three LC stages, and provides practical guidance for the enterprises to prevent and control the financial crisis according to their own LC stages;@discussing on the FEW by combining intelligent algorithm and the traditional model effectively. Kalman filtering and Logistic regression models are established in the three LC stages, which suggest that the combining of modern intelligent algorithm and the traditional model with wide application brings out the best effectiveness. Not only does it achieve both dynamic and static FEW, but also it explores the predictive validity of different FEW models in different LC stages.