Research On Methods Of Early Warning Of Financial Distress In Chinese Information Technology Listed Companies

The research on early warning of financial distress is an important research topic in the field of financial management. However, in previous studies we found that the financial early-warning model of all listed companies can not do the warning judge accurately on a specific industry, and the financial early warning for one period can not judge financial crisis accurately in another period, while different methods differs in the applying conditions and warning rate of correct. The main content we studied is the methods of early warning of financial distress in Chinese information technology listed companies. In recent years, the information technology industry developed so quickly but the short product life cycle, big initial investment and narrow financing channels, unstable cash flow make the financial management of listed companies in the industry more particular than others. Financial crises in recent years happened in this industry is second only to manufacturing enterprises. Therefore, by analyzing the financial situation of listed companies in information technology industry in recent years to establish and compare early warning models, it can improve the quality of warning models and make a support for the whole industry.This paper firstly clears the definition of a financial distress,carefully analyzes reasons for the financial distress arising,introduces an early warning of financial distress and the basic contents,lists and compares the merits and demerits of different models of early warning. By classifying the current methods it point out the existing problem of methods using in financial early warning of information technology industry, and selects three methods to establish models. Then the article designs the financial early warning model of information technology industry, and use discriminate analysis, factor analysis and logistic regression to establish models respectively to test the ability to predicting accuracy of each model. After the test, the article makes a further study on the comprehensive application and optimizes the models by comparing the Prerequisites and the advantages and disadvantages of each model. Finally, to summarize this article and make a number of prospects on the early warning study of financial distress about China's information and technology listed companies.