The Influence Factors Of A Empirical Research To The Financial Distress Costs Of China's Listed Companies

Under the background of the financial crisis sweeping the globe, the first-class investment bank collapsed, the countries of the financial system and capital market are facing great threat, in this time the corporate governance has become the focus of attention of the world. People used to have paid attention to the enterprise management, ignore the company management. Now regulators are increasingly consciousness of management of the company rather than consider customer satisfaction. Besides, we still need to focus on investors. When the company faced with crisis, we should more focus on corporate governance level measures rather than the traditional management.Enterprise as a social economic structure looks like the biological organisms. It is a process that from birth to death and from good to bad. The company has the life cycle, so how to continue the life of the enterprise, make it become the company with "long life" is of far realistic meaning. This paper researches all kinds of factors that influence the financial difficulties from the angle of corporate governance. The research is from the ownership structure, the board of directors of the specific characteristics and executives incentive. The author selecting 2004 to 2009 years China's Listed Companies into financial difficulties as sample, using multiple regression models to research the relationship between corporate governance and the cost of financial difficulties. The empirical results show that corporate governance and financial distress have relevant relations.The law about enterprise bankruptcy of The People's Republic of China added the regulation of system of merger and restructuring on enterprise from 2006 year. The Purpose of this is to help enterprises which experience financial difficulties to get out of a difficulty, revive and avoid a bigger loss through restructuring strategies. The practice shows that the enterprises which are all in financial difficulties, some enterprises can quickly recover financial health, but some enterprise's financial state gets worse even spiral down in performance. Some scholars think that this situation was due to blind investment, liquidity shortage and management reflect not in time. The authors think that all these are surface problems, the reason for enterprise in financial difficulties in time after the siege can't a deep is corporate governance problems. This paper researches all kinds of factors that influence the financial difficulties from the angle of corporate governance. Corporate governance generally falls into two kinds. One is the internal management and the other is external treatment. However, it is special in china, In the external governance mechanism, the market for corporate control, manager market and related legal system and other constraint mechanism is still not perfect. So the external governance isn't work. This paper researches all kinds of factors that influence the financial difficulties from the angle of corporate governance. The research is from the ownership structure, the board of directors of the specific characteristics and executives incentive.Because of the various factors, while the authors trying to make the perfect, but there are still many limitations, sum up the following several have the shortcoming of the:1. This article from the current ratio and operating profit from the point of view of the definition to the financial difficulties of financial difficulties cost, because the current ratio of different industries have a lot of difference, and the current ratio less than 1 does not mean that enterprise into financial difficulties, just explain enterprises into financial difficulties possibility is very large.2. In this paper, the costs of financial difficulties the measure the involved only indirectly financial difficulties cost, no direct financial difficulties cost counted. This due to the development of China's listed companies.3. This paper only studied the influence of cost factors of financial troubles, but do not study how financial troubles company can out of financial difficulties.