THE PREDICTION OF CORPORATE FINANCIAL DISTRESS——ON ST COMPANIES OF CHINESE SECURITIES MARKET

Bankruptcy systems are the basic grounds of economy cycle, which provide approaches for noncompetitive entities to exit this battlefield. However, as we know, bankruptcy can lead to serious consequences. If we can use a model to predict the bankruptcy possibilities, maybe some or even most of the unfavorable results can be avoided. This dissertation is one of the first efforts in this area in China. In our country, bankruptcy legislation is becoming more and more applicable and significant, which constitutes one of the most primary conditions for the setup of Bankruptcy Prediction Model. On the other hand, this kind of model also has important meanings to the Special Treated companies in the stock market. In this dissertation, I define these Special Treated (SI) ones as financially troubled companies, and then use financial data from these companies, compared with those from Non-ST ones, to build a numerical prediction model. This model can be used to assess the possibilities of whether a company will be embarrassed by financial problems in the future. I believe it抯 very useful for investors, official authorities, auditors, and bank creditors. Following are the main contents of this dissertation. Chapter 1 reviews related literatures in this area. Chapter 2 introduces and analyzes the basic numerical methods used in my model: sampling method, variable selections, uni-variant discriminant analysis and multi-variant discriminant analysis. Chapter 3 samples financial data in Chinese stock market and concludes a numerical ? model. Firstly I screen out nine variables by mean-comparison and frequency-distribution, and then I use Bayesian Discriminant method and Stepwise Discriminant method to summarize this model. Chapter 4 gives conclusions and suggestions for future research.