The Research Of Financial Risk Warning Model About Chinese Listed Company

After 10 years development of the securities market of China, Shang Hai and Shen Zhen stock markets already have 1,347 A-share listed companies till May, 2006. The total market value amounted to 3.67 billion Yuan. Since many original large listed companies are mostly state-owned enterprises which have been transformed into listed companies, their business models and management tools have no fundamental changes. They operate inefficiencies and existing huge financial risks. So many companies are on the verge of bankruptcy. Furthermore, for Chinese capital market imperfections, once enterprises potential financial risks transformed into real financial crisis, enterprise's assets are hard to sale on the normal value and bring losses. Legal costs, other paying costs and opportunity cost are ensuing which inevitably causes great waste of social wealth. At the same time, the financial crisis will have serious social costs, such as social security issues about the large number of laid-off workers. Therefore, goes on the market the corporate finance risk early warning model research to China to have the vital significance.All through the ST and non-ST listed companies (All listed companies to the stock markets in Shenzhen and Shanghai A-share listed companies) comparison and analysis, found that there are great differences in overall financial situation between the ST and non-ST listed companies in four aspects: operation, financial structure, capacity growth, solvency. Based on the differences of ST and non-ST listed companies, using distance judge France, establishing the early warning models for their overall financial situation and forecasting the financial position of enterprises will warn models for four respects. Group financial risk warning models can help managers to discover potential financial risks of the enterprise and identify the causes of financial risk, thus enterprise financial crisis will be nipped in the bud. This is the difference between this and other related research. In addition to the financial risk group as a model using as a tool in the management of enterprise management for early warning, it also provides the necessary information for the interests of enterprises related to the other parties.