The Construction Of Forewarned Model For Financial Crisis In Chinese Listed Corporations

The capital markets are usually called as "a barometer of economic development,"by western economists. Served as the foundation of the capital markets, listed corporations play an essential role. Meanwhile, its performance not only gives influence on the capital markets and investors, but also has connections with the national economic development and stability. Its financial crisis is rendered as one of the biggest risk the investors, creditors and stakeholders must face. Thus, how to offer a timely and effective prediction on the financial crisis under the help of the construction of a forewarned model has been a hot topic for the scholars both at home and abroad.Jensen's free cash flow theory which effectively provides the interpretation of the agency issues under an abundant free cash flow circumstances draws a comprehensive attention in the world. Generally, domestic scholars' applied research on free cash flow focuses on investment in securities, value assessment for corporations, analysis on credit risks and so on. Though the exploration which applies the free cash flow to the forewarned model for the financial crisis is still under the way in China, based on the previous theoretical achievements, we construct a forewarned model with a free cash flow norm in this paper.The first chapter interprets the significance of this research and its backgrounds, introduces the theory of free cash flow and its present conditions and offers reviews on the construction of forewarned models which are set up by domestic and foreign scholars. The concept of the financial crisis and the calculating methods for free cash flow lie in Chapter Two. In the next part, the author describes the listed corporations'performance in the financial crisis. And the selected financial indicators and corporation samples appear in Chapter Four. On the basis of single variable analysis of the listed corporations' indicators and data, we construct a forewarned model with a free cash flow norm for financial crisis in Chapter Five. And that proves to be feasible. In the last chapter, the author will present his vision for future and give analysis on the paper.