The Index System Construction And Empirical Research On Financial Crisis Warning In Chinese Listed Company

Under the market economy, companies have suffered the rule of “survival of the fittest”from the day of their establishment. The increasingly fierce competition and the uncertaintyfinancial environment make risk that companies face more intensified. With the trend ofglobalization, the more open international and domestic markets bring companies moreopportunities as well as enormous financial risk. And the occurrence of financial crisis is agradual and accumulating process. When the financial crisis reaches a certain degree withouttaking necessary protecting action, the companies will fall into financial crisis. China’s WTOaccession has brought risk and complexity to the companies, and the listed companies, as thereform pioneers, will face reform and development opportunities as well as more intensecompetition and greater risk and crisis. Therefore, it is very necessary to build an efficient andacute financial crisis pre-warning system to predict the possibilities of financial crisisoccurrence.On the basis of all-round and deep study on current situation of financial crisis of listedcompanies in China and study results in the field abroad, this paper proposes the properdefinition to financial crisis of companies in China and raise two methods of measuring costs,according to the characteristics of clear signs, easy to measure and clear extension. And itdescribes the essence of financial crisis, its manifestations, formation mechanism and internaland external reasons. it combines the financial analysis theory and research results to proposethe “special treatment”(ST) is the sign that companies have fallen into financial crisis. It alsoincludes25financial index variables and102samples of listed companies. In the paper, we usenon-parametric test to test the financial index significance of two types of companies, thencombine with factor analysis method of condense the financial index and build a pre-warningsystem of financial crisis. After that, we also use Logistic regression method and publiclyavailable financial data to build a pre-warning model before the occurrence of financial crisis,and use model test, the correction rate of which reaches91.18%. The result shows that theusefulness of model is relatively strong and is very suitable for predicting financial crisis oflisted companies in China. Finally, the paper has reviewed and pointed out the deficiencies of this paper. There still are some points to be improved and further studied.