Research On The Model Of China's Corporate Financial Distress And Early Warning Model Under The Complex Environment

The problem of corporate financial distress 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 interests of credit institutions and secruities investors, envn to the economic security of countries which might trigger a worldwide economic crisis. The continous acceleration of business globalization and fiece competition among the companies around the world increase the uncertainty and unpredictability of the market, which makes enterprises face a far more complex internal and external economic enviroment than before. The global financial crisis, started from 2008, has seriously hindered the pace of the development of world economy, which lifts the importance of early warning of corporate financial crisis to an unprecedented high position. Therefore, it is urgent to understant the causes and process of formation mechinism of corporate financial distress under complex enviroment for better and precise early warning of corporate fiancial distress.The previous studies don't provide sufficient implications on corporate financial distress under the complex environment. Thus some new ideas and methods must be developed for it. Consequently this article focuses on this problem from two perspectives of enterprise life cycle and integration early warning models. First, enterpersie life cycle theory could provide some significant suggestions on the problem of corporate financial distress. Because there are significant differences of the enviroment the enterprises face among their different enterprise life cycle and also the enterprises in different life cycle stages have different ways and abilities to perceive and respond to their external environment. Second, pervious research on the topic of early warning models of corporate financil stress mainly use the single classfier to predicate the financial conditions of enterprises, neglecting the advantages of the integration models of mutiple classifiers. The performance of a single classifier depends on the characterisitics of samples and also is uncertain because different classfiers might have different results of prediction, which makes its validity questionable. Therefore, this article employs Choquet fuzzy integral method, which is a tough powerful nonlinear reasoning method for uncertain environment, to integrate different single classifiers. This method could take the advantages of single classfiers together and make the information of different classifiers complementary, providing a great tool for early warning of corporate financial distress under complex environment.In the context of complex environments, from the perspective of corporate life cycle, based on the previous literatures, using case studies, simulation and empirical research methods, this article systematicly anaylizes the causes and formation processes of corporate financial distress and innovatively bring forward the formation models for corporates in different life cycle stages. Meanwhile, in view of the uncertainty of previous financial distress prediction model, this paper combines enterprise life cycle theory and Choquet fuzzy integral method to explore a new integration early warning model of corporate finanical distress under complex environment in order to greatly enhance the prediction accuracy.First, this article puts forward formation models of corporate financial distress generated in different life cycle stages, on the basis of analyzing the literature, combining with the characteristics of enterprises in different life cycle stages, through theoretical analysis, case studies and simulation methods, which also provides a new perspective for the study of corporate financial distress under complex environment. For start-up companies, there is an inverted "U" shaped relationship between the possibility that financial distress happens to a start-up company and the company age. The mainly factors that cause a start-up company into financial distress are manager's experience on business mangement and industries, the enterprises'scale and marcoeconomic enivironment. Growing companies who expand extremely fast because of the over confidence of managers often easily go through financial distress. For mature companies, a poor corporate governnance might trigger the "moral hazard" of managers and leads major shareholders tunelling the money out from the company, which easily causes corporate financial distress. For the companies in the recession stage, due to the poor flexiability of organization and poor ability of innovation, the companies might go into the end of product life cycle and finaical distress.Second, this article establishes a model based on mutilple intelligent agents for simulating the process of corporate financial distress formation, which provides a new tool for anaylizing corporate fianncial distress. With the Anylogic software we simualte the process how corporates in different life cycle stages get financial distress. The simualtion results strongly support the models we have put forward.Third, this article comprehensively identifies the key factors that make corporates in different life cycle stages get financial distress, which also is one of the important research fields of corporate financial distress. The previous study neglected the factor of enterprise life cycle. Therefore, this article uses cash flow method identifying which life cycle stage a corporate is going through, then identifies key factors of different life cycle stages from two aspects of financial factors and non-financial factors with the method of factor analysis and logistic regression. The results show that for growing companies, the key factors includes profitability, growth capacity, operational capacity, solvency, main business concentraion, cash flow status and ownership concentration; for mature companies, the key factors include profitability, growth capacity,, and cash flow status and main business concentraion; for companies in recession stage, the key factors include operational capacity, main business concentraion, long-term solvency, equity structure. Identifying the key factors of different enterprise life cycle that cause financial distress not only gives some suggestions for the selection of indicators of early warning models, but also provides implications for enterprises to adjust their situation according to the life cyle they are in.Fourth, this article establishes an integration model for predicting financial distress based on the combination of life cycle theory and Choquet fuzzy integral, considering the impact of complex environment on enterprieses. On the one hand, this model takes the different charecterisetics of enterprises in different life cycle stages into account. On the other hand, this model employs the nonlinear Choquet fuzzy integral method, which not only focuses on the prediction results of single classifier but also consider the comprative weight and interaction effect of different classifiers, compared to linear methods represented by maximum method, average method and vote model. Then this article takes the data sample of Chinese listed companies for empirical study. The results show that the early warning model we establish greatly improve the accuracy of predicting corporate financial distress, which could help stakeholders prevent the occurrence of financil distress by taking some mearsures in advance to avoid the loss of interests.Finally, this article proposes an adatptive fuzzey mearsure for complex environment by adjusting static fuzzy density with the dynamic information under identifying condition. Fuzzy measures are the key part of fuzzy integral. The previous studies which use the confusion matrix for fuzzy measures often overlook the differences between training condition and identifying condition. This article not only takes the static fuzzy density under training condition into account, but also adjusts the static fuzzy density from the aspects of the validity results the output results of single classifiers by using the dynamic information under the identifying condition, which lays the foundation of Choquet fuzzy integral for the early warning models of corporate financial distress under complex environment.Having understanded the formation mechnism of financial distress generated in corporates'different life cycle stages, this article correspondingly brings forward some suggetstions to help enterprises of all life cycles avoid the risk of financial distress and help stakeholders such as shareholders, debt owners avoid the economic loss, which has great implictions for a stable eocomic order of socities and the ecocnomic security of countries.