Research Of The Financial Distress Early-Warning System Of Our Listed Companies

When China entered WTO, it was not only opportunities but also challenges and pressure for domestic listed companies. Facing competition from domestic and overseas market, listed companies must enhance management and guard against financial distress (FD). However, for several years, domestic listed companies only heightened management, such as reforming corporate system, improving level of employees, but paid no attention to supervising financial information. So a few famous listed companies quickly broke down. Once the FD occurs in a company, investors and financial institution will sustain losses. It can even lead to finance crises. As the FD can not take shape overnight and has longer latent period , the FD early- warning system become necessary and possible.Now domestic researches on FD prefer to look for the financial ratios, which play highly significant roles in predicting FD firms. But it is not enough for establishing early-warning system and preventing occurrence of FD. This article absorbs the other' s research achievements and put forward early-warning system should include two parts. One is prediction by financial indicator, the other part is prediction by qualitative analysis. In addition, carrying out the early-warning system should be at any time and in the end of year.The main context of this article includes:Chapter 1 introduces the research background, research meaning and research situation of the FD early-warning in China and abroad. It also puts forward the research purpose and contents of this text.Chapter 2 defines the FD and the research object ST & PT listed firms of this text, analyzes the situation of FD of domestic listed firms and the reasons causing FD and puts forward the necessity of establishing theFD early-warning system.Chapter 3 is the review of domestic FD early-warning model for listed companies. It compares and appraises various kinds of models, at the same time, illustrates their application with examplesChapter 4 is the core of this article. According to the conclusion of chapter 2 and the research results of chapter 3, this chapter presents some strategies to better the FD early-warning model and establishes the FD early-warning systems, which satisfy the domestic listed company needs. This system includes quantitative analysis and qualitative analysis. Functionally, it includes three subsystems: monitoring basically, monitoring in good time and monitoring following.