The Study On The Cost Of Financial Distress And Influencing Factors In Chinese Listed Companies

As the problem of financial distress is an important and complicated research field of corporate finance, the cost of financial distress is also a disputed concept and thesis. The complexity of the financial distress cost lies in three aspects:Firstly, the understanding to the relationship between financial distress and company achievement is different among financial scholars, i.e. the problem that whether the financial distress cost exists or not and what is it; Secondly, if the financial distress cost does exist, then how to measure it accurately; Thirdly, what are the cost’s influencing factors, and what’s the relationship between them.This paper made the turnoff of cash flow and the state unable to pay debts as the sign of falling into financial distress in the view of listed companies, based on which this paper defined the financial distress costs. After appraising the existing measuring model of financial distress cost, this paper formed a general model, which expanded to the credit capacity, the management capacity of property, the cash flow capacity, the development ability and other financial indexes. Based on the model, the paper analyzed the influencing factors of the financial distress cost with the method of multivariate linear regression and correlation analysis through five aspects:corporate governance, corporate characteristic, external environment, leverage operating and the length of time related to distress. At last, this paper gave some advice that establishing the financial distress predicting system and perfecting the mechanism of corporate governance in order to provide reference for the distress corporate to get rid of it and reduce the distress cost. At the same time, this paper also wants to make some contribution to promote the sound development of the listed company, and realize the rational distribution of social resources.