Research On Financial Risk Alarm Model And Application Of State-owned Listed Company

From the US subprime mortgage crisis to the European sovereign debt crisis whichis still up in the air, risks became the theme of economic life again. Along with theglobalization, the economic uncertainty all over the world is amplified once more in thiskind of turbulent situation. As the main body of an economic system, enterprises haveto take the challenges of risks and crisis under a new environment. Whether anenterprise could keep the constant competitive advantage depends on its ability torespond to changes quickly in the uncertain environment and ability to alarm riskinformation.The state-owned listed companies are the high quality assets of state-owned assets,their own safety and development is related to the national economic security andnational comprehensive strength. Thus, the ability to alarm and control financial risk ofChina’s state-owned listed companies in the turbulent environment will not only berelated to its own survival, but also to national economic safety. On April26,2010, theMinistry of Finance, the Securities Regulatory Commission, the National Audit Office,the Banking Regulatory Commission and the Insurance Regulatory Commission issued‘the enterprise internal control supporting guidelines’ jointly, which implies the riskmanagement has already been advanced to country strategy level.Risk management research in foreign enterprises starts earlier. Generally largeenterprises have perfect risk management institution, which equipped with specialists ofrisk management and risk management information system. However, risk managementresearch starts later in our country. There’s no complete research system yet. Besides,the results of foreign researches cannot satisfy the demands of ours because of differentconditions. After more than30years of China’s reform and opening up, the reform ofthe state-owned enterprises has made the significant progress while the impact of theinherent regime problems still exists. In the beginning of this paper, the currentcharacteristics of financial risk and the formation mechanism of our state-owned listedcompanies were revealed based on the theoretical analysis under the regime backgroundof the state-owned enterprise reform. Then it is found that the property of fuzzy, theabsence of investors and the incomplete company governance mechanism are theinternal causes of the financial risk of the state-owned listed companies. At the sametime, the low level of government management and the poor financial ecological environment were found to have significant impact on China’s state-owned listedcompanies. Later, the financial risk alarm index system was designed based on thecharacteristics of China’s state-owned listed companies. In the part of empirical study, acomprehensive financial risk alarm model was built by applying the multiple Logisticregression model, using the sample data of175state-owned listed companies from2007-2010years and taking the enterprise financial index, the corporate governancefactor, the impact of external financial ecological environment into account. Finally notonly the factors of financial risk of the state-owned listed companies in above analysiswere proved, but also the satisfactory prediction effect was achieved.