Research On Factors Affecting China Listed Companies Under Emergence From Corporate Financial Distress

In this paper, "financial distress" is defined as a financial condition so severe that failure is likely. The prediction of the occurrence of financial distress and corporate failure in international academic field has a long history in financial research. More recently, from about 1980s, a number of studies have turned to the problem of how financial information can be used to predict and assess the likelihood of emergence from financial distress. The research about financial distress in China is along with the implementation of special treatment (ST) rule, with a focus on financial distress; but seldom paying attention to financial distress turnover. With improvement in information disclosure and perfect execution of ST provision, new research perspective is provided for both theoretical and empirical study.The paper is organized as follows. Section 1 provides the background information of this research. Related literatures are reviewed in section 2.The research method and hypotheses are discussed in section 3 and the empirical results are discussed in section 4. Empirical test results using a sample of 172 ST firms, including 81 recovered firms and 91 counterparts. In the empirical analysis, logistic model is adopted. The conclusions are presented in the final section. This paper finds out a significant positive relationship between Solvency, Profitability, Macro economy and the emergence from corporate financial. A generally positive relationship is between the growth potentiality and distress turnover. However, the relationship between operating capacity, managerial changes and financial distress is insignificant.These findings have practical implications for companies, investors and regulatory authority. Corporate in financial distress can implement relevant measures suggested in this research to speed up the recovery process. Investors, particularly those who want to invest in financial distress corporate for high returns can use the research results. Regulatory authority can improve the effect of supervision by estimating the possibility of recovering.