Theoretical And Empirical Research On Financial Distress Prediction Of Listed Companies

Empirical research on financial distress prediction is one of the most important research subjects in many foreign countries especially in the developed capital market countries. As an important part of economic and financial prediction system, the research has not only high academic value but also enormous practical value. With the development of economic theory and improvement of research methods, the research is furthering on, at the same time, the strong requirement from practitioners also push the research forward. With the rapid development of Market Economy, We must try our best to perfect economic prediction methods and construct prediction system. Advanced distress prediction models are of considerable importance to our security market, commercial banks and CPA firms. Due to the great interests to the topic and special concern about the value of its application, in this paper , we try to construct several financial distress prediction models of Chinese listed firms based on the review of previous empirical results and a thorough understanding of Chinese condition and hope to devote to the development and application of the theoretical and empirical research on financial distress prediction of Chinese listed companies.The study in this paper includes five main parts: firstly, We explain the background and purpose of this study, some conceptions about financial distress and the idea and methods we have applied in this paper; Secondly, we review the theory of financial distress in foreign and domestic area; Thirdly, considering the agent cost, we derive out company's market value and critical point value , and apply the pricing theory of options to the study and get a model of financial distress prediction. It can reflect a great deal of deterministic situations that the real world exists, this kind of uncertainty is not totally equal to the risk, in a sense, it includes value which a traditional method doesn't consider. It and the world's own complexity interweave together, can overcome simple linearization , therefore can improve the precision of prediction of the model effectively. The forth part is about empirical study, with the sample in order to study of listed company that was especially dealt with (ST) because "the financial situation is unusual" in 2000-2003 years, and select normal companies according to the relevant industries and years. The empirical study of this paper is different from the previous study: firstly, theAbslractsamples selected in this paper are new ,long-period and the amount is very large; secondly, we has not only chosen the financial variables, but also joined the variates of structure of corporate governance; thirdly, we select a great number of normal companies as possible as we can to improve the predicting effects of this model. The method of logistic regression is used and in the end we get the predicting model which including financial and corporate governance variates. According to the empirical results, we can conclude that the accuracy of the "-1 year" model was above 93.34 percent, indicating that it has the great ability to differentiate and can applied to deducing prediction. The fifth part is the conclusions and look into the distance.Lu yang(Finance) Directed by-Yang Chunpeng...