An Empirical Study On Financial Distress Prediction Of Listed Corporations Include Non-financial Variables

Financial distress is a cosmopolitan problem. Since 1960s, studies on corporate failure prediction have prevailed both in the U.S.A and in European countries, and some researches on this subject have been conducted in our country in these years. Most of prior research has been concerned with the establishment of corporate failure prediction models based on only financial ratios. This paper makes use of the financial statements of listed companies in China Stock Exchange and builds a successful model for corporate failure discrimination with Logit method. Based on finacial factors, the researcher add some variables into the modle which includes factors of corporate governace and sensitivity of macroeconomic conditions.Firstly, This paper discuss the concept of financial distress, than it review the important literature on financial distress from domestic and abroad papers, and introduce some innovations and development trend in predict methodology with non-financial variables over the past two decades especially. By the way, it discuss the main progress in this study. Secondly, the paper introduce how to cacaulate the sensitivity of macroeconomic conditions, and then the researcher discuss how can they add variables of corporate governace into the prediction model., and then introduce how they design the study. The paper also put detailed description on sample selection and data source. At last, they do the empirical study and summarize the results. In addition, the paper summarize the shortcomings of our study and suggest the future study.The empirical results indicate that the models built up have satisfactory predicting accuracy, and the models include non- financial variables is more accurate.