A Study On Early-warning Of Financial Crisis For Listed Company Of Manufacturing Industry In The Pearl River Delta

In recent decades the manufacture industry in the Pearl River Delta has witnessed rapid development.However,with the changing macro-economic situations,such as shortage of energy supply and the implementation of new labor law,the comparative advantage of the manufacture industry in the region has been eroded.Especially with the up-rise of Renminbi and the attack of financial crisis,the manufacture industry in the Pearl River Delta,which is characterized by the high-dependence on overseas markets,has faced unprecedented challenges. It is theoretically significant and practically necessary to investigate the early-warning mechanism of financial crisis of manufacture industry in the region.The sample of the study are 15 ST manufacture companies in the Pearl River Delta from 2005 to 2007 which are compared with other 15 well-run companies in the same sub-industry. The study pre-tests the basic early-warning indicators from the information significance and replicability perspectives,which retains nine indicators as the major independent variables of the early-warning model.Then,traditional financial indicator,cash flow indicator,and non-financial indicator are added to the model in a step-wise way.Finally nine early-warning models are tested with logistic regression based on the sample data at time t-1,t-2,and t-3.It is found in the study that the precision of the early-warning model has a negative relationship with the time-period that the early-warning model aims to predict and has a positive relationship with the number of indicators in the model.