The Early-warning Model Study On The Vicious Alteration Of Financing Capital' Use Of Listed Companies

In recent years, the problem that the listed companies changes the use of financing capital becomes increasingly prominent and attracts more attention of the Supervision Bureau, investors and the media. However, this phenomenon has a dual nature: On the one hand, it performs as the long-term investment adjustments of the company which called well-meaning alteration; on the other hand, it shows as vicious alteration which is the opportunism behavior lacking restricted condition The listed companies which have vicious alternation behavior often blindly patch up projects and enclose money, then make up the various reasons after successful financing to alter the fund use by the methods of expropriation of large shareholders and related party transaction. This vicious alteration behavior goes against the resource allocation function of capital market and is seriously harmful for the rights and interests of small shareholdersGiven the negative influence coursed by vicious alteration, the author put up a early-warning model research based on vicious alteration behavior of financing capital' use of listed companies. The paper tries to answer the following questions: what is the motivation for the alteration behavior of the listed companies? Is this behavior predictable? Whether can the signal of vicious alteration be discovered through analyzing financial status and management level of companies in advance? Whether can an early-warning model be established to provide tool for decision-making based on the common features of the companies vicious altered? The study on these series questions is significant for controlling the vicious alteration.This paper mainly divided to theoretic and empirical study: Firstly, define the vicious alteration behavior of companies from the alteration rate, alteration timing and the use after alteration and explain in detail the significance of distinction of the alteration behaviors. Secondly, we found the funds gaining from the vicious alteration is used on supplement of flowing funds , repayment of bank deposits and equity acquisition of related party through statistical analysis in 2007 .It was concluded that the financial status and management level of company if the inner reason of the listed companies to alter the financing capital's use viciously. Thirdly, the paper selected the listed companies which change the financing capital's use in 2007 as samples. The empirical study was based on the financial indicators and management indicators of companies in the year before alteration behavior. The Samples T Test was used to judge which indicators are significantly different between vicious alteration companies and well-meaning alteration companies. Factor Analysis was used to distill the key indicators to establish Logistic Regression model. This process selected the indicators for establishment of the early-warning model of vicious alteration, eliminated the multicollinearity between the indicators and tested the established model.The conclusions are: firstly, there is significant difference existed in the financial indicators which reflect repayment ability, developing ability and the cash flowing ability between well-meaning alteration and vicious alteration companies. Secondly, the greater debt-paying pressure of companies, the more for them to change financing use viciously. Thirdly, the poorer of the cash flows, the stronger motivation of the vicious alteration. Fourthly, we can forecast the vicious alteration motivation by asset-liability ratio, sales cash ratio and the first shareholder Z-score. The accuracy rate of the model is 81.25%.This research not only lays the foundation investors to distinguish the alteration of financing capital' use and scientifically make decision for investment but also provides high reference value for the management layer to avoid effectively the vicious alteration of listed companies.