Study On Financial Distress Prediction Of The Manufacturing Listed Companies In China Based On The Managers’behavior

With the deepening of the market economy and the change of macro-economic environment, the listed companies in China face increasingly fiercer competition. It provides opportunities for the development of our companies, but, at the same time, it also brings risks and crisis to investors and creditors. All in all, there are certain risks in the financial market. Manufacturing listed companies play an important part in the national economy. However, the manufacturing listed companies encountered greater financial difficulties in the market environment, which takes up seventy percent of all the companies in financial crisis. It is said that many companies in Jiangsu province or Zhejiang province faced serious financial difficulties in2012. In the southern industrial park, it appeared that a lot of companies sold their inventories. All in all, due to the financial stake in the market, manufacturing industries meet serious problems. It is urgent to solve the financial difficulties of manufacturing industry.However, it is not an overnight thing to be in financial distress for the companies. It is a must for all companies to show some signs of deterioration in the process of financial distress. By focusing on these symptoms, related enterprises can strengthen their administration on the companies and curb their further deterioration of financial situation. As a consequence, it is of great importance for the investors and other stakeholders to construct a financial distress prediction model.Review of literature at home and abroad, the study of financial distress prediction is popular both in the practice and in the theory. In the past decades, experts at home and abroad have certain research based on the cash flow, financial indexes, and corporate government perspectives and so on. However, these studies are the results oriented, research based on financial data have a certain lag.The paper summarizes the warning research of financial crisis at home and abroad, uses logistic regression method, selects variables from the perspective of managers’behavior, and establishes a financial distress prediction model which is more suitable for the manufacturing companies. The full text composes five chapters. The first chapter introduces the research background of this paper, proposed the significance of the research as well as the key contribution of the research. Chapter two, at first, the paper try to define the definition of financial crisis with the specific conditions in China, then a whole part of methods which are used to take the financial warning will be introducted. At last, a full review of the theoretical basis for early financial crisis warning at home and abroad, this includes third aspects. The next two chapters are prepared for the empirical study. Firstly, it will introduce the variables and research perspective. Secondly,50listed companies, which are regarded as abnormal ST financial companies from the year of2010to2012, are selected as samples. Meanwhile, another100financial health companies are selected as the paired samples. Then, select9indicators which can describe the managers’ behavior well as alternative variables. Next, the article deal with the variable descriptive statistics, normality test, and significance test, correlation analysis and then filter out the variable regression model. After testing, it will separate the sample into two parts, which is a group of high technology and the other is non high technology. Then a comparison between the two groups will be given, as well as key indicators which is specific to the two groups. Finally, point out the limitations of this study and prospect future research.Through the research, the paper draws the following conclusion. Firstly, the warning model of this paper has higher prediction results. The empirical study of150manufacturing enterprises shows high prediction efficiency. What’s more, the selected indexes can basically reflect the managers’behaviors about increasing cash flow behavior, reducing the cash flow behavior, change in corporate governance and long term investment behavior. Through these behaviors, share takers can carry out early warning about the financial distress. Secondly, indexes and the results of the financial distress have significant relevance. Thirdly, the different companies with different production technology have different early warning indicators in the financial distress. As a result, both the regulators and the stakeholders must focus on the different types of indexes according to different companies. By doing so, they can have an accurate judgments on the enterprises.The main contributions of this paper include the following three parts. First of all, this paper innovatively introduce indexes from the perspective of the managers’behaviors, the establishment of the financial distress model can improve the accuracy of early warning. Secondly, this paper pays attention to the specific industry which is manufacturing companies. It plays a great role in the development of our society. The healthy development of manufacturing companies will have great influence on the society. By doing research on the manufacturing company, it is of high practical significance. Finally, the paper deeply divides the sample into two parts, which is a new point in this industry. In this paper, the manufacturing companies of large sample are divided in two parts, one is high tech companies, and the other one is non high-tech companies. Compared with the exiting literature, it is more profound and comprehensive.