A Research On Company's Financial Crisis Management Based On The Theory Of Entropy

The so-called financial crisis is the corporate financial activity is out of control or is frustrated by the serious risk so that is in the state of emergency. It also means the ability of enterprise profitability and solvency is substantial weakening, more serious it may tend to bankruptcy. Financial crisis is the external manifestations of corporate financial imbalances, tensions and deteriorating. The corporate has a dynamic process including potential danger,development stage, degeneration and outbreak. Facing of "survival of the fittest" competition in the market, the financial situation of Chinese listed companies encounter greater concussion than ever. In view of this, managers need to establish a framework for precautionary financial crisis, diagnosis, prediction of financial crises and to deal effectively with the crisis management system to help companies avoid and resolve financial crises that may arise. There are some executions to reply financial crisis, at the same time, many theories of financial crisis pre-warning are used for financial crisis management. But they just reply one stage of financial crisis and can't direct the full process of financial crisis management into practice. Facing the embarrassed condition, the theory of entropy has the characteristic of measuring of uncertain factors, so it opens a new perspective of study of financial crisis management. From the second law of thermodynamics, the theory of entropy and its generalization and related theory have formed a rich content, covering a wide range of "entropy family": The entropy weight method can differentiate influence factors of the financial crisis, theory of entropy change describes the financial dynamic process from the ideological factor, the management entropy theory provide a scientific management path for financial crisis management.The study of this paper is a research on Chinese listed companies based on the theory of entropy, including financial crisis pre-warning, dealing with financial crisis in the processing and the subsequent reflection. The main aim is to use the same characteristic of financial crisis and entropy to establish the system in order to achieve the reduction of risk, reduce the loss of enterprise value, to maintain the safe operation of the purpose of corporate finance. Therefore, according to the character of stage of financial crisis , the paper studies the financial crisis from the incubation of crisis, the outbreak of crisis to the regression of crisis. The system of companies'financial crisis management in this paper will use the theory of entropy completely, to form a system of financial crisis management based on the theory of entropy.The paper is divided into four parts: the first part discusses the definition of the entropy and the financial crisis management. In the beginning ,it describes method of application of entropy about the managerial entropy, the entropy weight and the entropy change; then defines the main concept of financial crisis management and gives the object of study in this paper; later, it explains three theoretical principle about the system theory,the dissipative structure theory and the theory of enterprise crisis management; at the end ,it analyzes the financial crisis management from the "entropy", proving the practicability of guidance of financial crisis management used by entropy. They are the main theories of the paper and also the cornerstones of the study. The second part is to show the specific research object of this article, and describe the present basic status of Chinese Special Treatment listed companies. Through this part of the introduction, we will know about the listed company with a Special Treatment. It also supplies the perceptual knowledge for the later study. In addition, in order to be able to combine the theory of the entropy to the financial crisis management of the listed company with a Special Treatment, it will use a case to present how the entropy change to interpret the development of the financial crisis. It is not only a text description of the study, but also defined the feasibility of using in the process of crisis management. The third part also the core of this paper, is the study of financial crisis management based on entropy weight model. Based on the dynamic development of the financial crisis, it is divided into three stages of empirical research. Using entropy weight method to decide the weighting of the financial indicator objectively and to find the most important indicators of the early warning of financial crisis, financial crisis and the financial crisis reflect period. Through the integrated sample companies with negative entropy calculation, it discovers that the data can be fully demonstrated the difference between the financial crisis companies and the healthy companies. The financial condition of the financial crisis companies is changed by the change of their entropy. It is proved strongly that the superiority of entropy using in the financial crisis management. The last part is a comprehensive summary of empirical studies of financial crisis management, and prospects the development of Chinese listed companies'financial crisis management.The innovation may exist in this paper are mainly two points in the follow: one is to make the best of the inner relation of financial crisis and the theory of entropy, and combine them closely. It expands the scope of application of the theory of entropy and the research of financial crisis management. The paper makes clear the development process of evolution about the company financial crisis from the scope of entropy. Another is that the paper is not only confined the early stage of the study of financial crisis, but also studies the change of the financial crisis according the comprehensive negative entropy of enterprise, and form a comprehensive financial crisis management system. Through an empirical research it has got the important factors at each stage of financial crisis, and also verified the philosophy that only developing primary business and improving the haematopoietic function can be ability to be against the financial crisis is right.