The Effect Of A Comparative Study Of Financial Risk Early Warning Models

In recent years, there has been a rapid growth in China’s capital markets and securities industry. The opportunity for a company to obtain further development also goes along with fierce competition. Competition brings opportunities and risks. When potential risks are not to be found in time and accumulated to a certain extent, they are highly likely to result in financial risks. Therefore, how to build a more accurate and sensitive financial risk early warning system that can be widely applied has become a hotspot in modern enterprise accounting theory and empirical research field. The key to resolve financial risks is to accurately identify those potential risks that are hidden behind the scene in the enterprise production and management section as early as possible. Many scholars have proposed a variety of financial risk early warning models in the current study. This paper compares three most representative and applicable financial risk early warning models in order to summarize the characteristics of each model and to try to build a stratified early warning standard, and hopes to contribute to establishing a more effective financial risk early warning method.In this paper, the author gives in-depth research and discussion using both theoretical and empirical research methods by the following five chapters:The first chapter introduces the background of the research, and proposes the main topic that is going to be discussed. It also emphasizes the importance of this research, indicates the research methods and outlines the whole theoretical and empirical analysis.The second chapter reviews the literature. Through the literature review, the author describes the developing process of the financial risk early warning theories, summarizes the main points of the financial risk early warning theories that many scholars have proposed and discusses the main issue that should be pay attention to in the following chapters. Then the author defines "financial risk","financial crisis", and "financial early warning" and sorts out the causal relationship among them, followed by separate discussions about the five major factors that influence financial risks based on three theories, providing a theoretical basis for the following empirical research.The third chapter author chooses67newly listing ST-companies in Shanghai&Shenzhen A-Share Stock Markets from2009to2011, and another67non-ST-companies that are comparable with the previous67ST-companies in terms of industry, year, and scale, thus a total number of134data samples. The samples are brought into the Fisher model, Z model and Logistic model and then use the data of ST-companies and non-ST-companies from2012to test out the accuracy of the three models. The author also establishes the classified early warning standard of non-ST-companies basing on the three models.In chapter four, considering the unique characteristics of biopharmaceutical industry and the applicability of the models in single industry early warning application, the author brings the data of Bio-industry in2012into the models which are built in the previous chapter and test out the accuracy of the models in terms of the classification of ST-companies and non-ST-companies. In order to predict future financial risks of enterprises through stratified early warning, apply stratified early warning to non-ST-companies in the Bio-industry, focusing on analyzing those companies that are severely warned.The last chapter summarizes the process of model construction and the analysis of the results, discusses the advantages and disadvantages of stratified early warning and indicates the limitations of this research.