Research On Financial Crisis Prediction Model Of China's Listed Companies: A Perspective From Cash Flow

It has been long since the research on financial crisis prediction theories as well as models, while similar research incepted only several years ago. Moreover, Chinese researchers just focus on models, leaving the financial crisis prediction theories untouched. Early scholars used traditional financial ratio to conduct research, and later cash flow ratios were used in models either independently or together with traditional financial ratios. However, research result using cash flows are still rare, and some of these works were done roughly.It is the aim of this paper to advance the research with cash flows with the help of statistics software and on the basis of former researches.This paper is structured in four chapters, with details followed by:Chapter one takes a brief review on the overall background of financial crisis theories analyzing the definition within the specific condition in China, since it is common that financial crisis has been define differently with specific research scope and purposes. A research method and perspective of this paper is proposes here.Chapter two illustrates financial crisis theories from both economics and management perspective. The economic perspective mainly focuses on the conditions of crisis while the latter explains the reason why a financial crisis happens. A literature review of past researches using cash flow and crisis prediction model is also conducted here.Chapter three is the core of the whole thesis. In this chapter there are four sections with section one determining the cash flow ratios appropriate, section two extracting matching data set, section three exercising primary statistics test, and section four establish model with the testes ratio and conducting out-of-sample test.Chapter four summarizes the whole thesis.It is the innovation of this paper that pure cash flow ratios are used in financial crisis models, and that a use of both the annual and semi-annual cash flow statements while excluding the statement the year financial crisis is based on.