Empirical Research On Financial Distress Prediction Of Listed Companies In China

With the development of the reform of china's market economy system and the capital market, the frequency of encountering bankruptcy and financial distress is becoming higher and higher . By July 1st 2001, there have been 105 ST companies in the security exchanges in Shanghai and Shenzhen. This phenomenon does great harm to the order of security market and the interest of many investors. So the demand of prediction of the bankruptcy and the financial distress of the listed companies is becoming more and more. The investors need to evaluate investment risk and prospect through financial analysis in order to make correct decision. This paper is meant to establish forecasting models by many methods, which has much realistic significance. At the same time this paper is theoretically significant. It has been a long time since the start of the researches about the prediction of the financial distress of enterprise and these researches have produced relatively mature fruits, which have been widely put into use. This paper, with reference to foreign research products, will verify the effectiveness of the forecast of enterprise financial distress by means of fiscal data and ratios of the listed company, statistical methods and predictive models. This paper begins with fundamental theories about financial distress and lays a theoretical foundation for the following positive research. Then it makes a retrospect about domestic and foreign current researches and summarizes their research products. Furthermore, based on these research products, it applies multivariate statistical analysis and artificial intelligence method to make positive research, which is the focus of this paper, and creates four predictive models of financial distress, from which we can draw conclusions. From a structural view, the whole thesis is divided into 5 parts. Chapter one——introduction It discusses some basic issues close related to the analysis: the definition of "financial distress", the background and the significance of this paper. Combined actual situation in China's security market, we regard "ST" as the sign of "financial distress"; it is necessary to do this research, which is practically helpful to theory researchers, practical people and investors. Chapter two——the basic theory of positive research about financial distressIt introduces the origin of financial distress forecast and research employing company's financial ratios and the basic theory of positive research. The western theories of accounting positive based on the EMH and CAPM. It illustrates that accounting revenue can reflect the factors about stock market through revenue in a semi-strong form efficient market, so can non-revenue figures. At the same time according to CAPM, in order to evaluate a company, for bankruptcy will reduce the cash flow in future, so the possibility of bankruptcy should be forecasted at first. Therefore many researches began to be engaged in of forecasting bankruptcy by means of accounting figures in company. Ever since the theory of positive analysis come into being. Positive research predicts obtained through financial figures. Although positive research has become the principal part of forecast research about financial distress, its economic theoretical base is weak, there exist a lot of drawbacks.Chapter three——the actuality and evaluation in domestic and foreignIt has been a long time since the studies of forecast research about financial distress in foreign country, so their fruits are more mature, however, there also exist some drawbacks. The domestic research about this topic is relatively scarce. In any case, the fruits of research establishthe foundation of our further forecast financial distress.Chapter four——introduction of research methodsIt introduces 5 multivariate analysis means and artificial intelligence method, which are applied in this thesis. They are stepwise discriminating analysis,discriminating analysis,principal component analysis,logistic r...