A Study On Financial Distress Prediction Of Listed Companies When Over-investment Determinants Are Introduced

30years since reform and opening up, with the change in the pattern ofeconomic growth, China’s overall economy has a high-speed growth.Enterprises in a relatively fair and increasingly competitive environment, it isthriving with the national development situation and the world economy linkstogether day after day. Listed companies with good performance, large scaleinvestment in fund-raising capacity is relatively strong advantage, as thesocio-economic cells, and its success or failure with the interests of allstakeholders in the amount of close. Some companies in financial crisis, it willincrease the degree of the economic bubble. Once the bubble burst, corporatebankruptcy, many industries will be like a Domino. Most companies have afinancial crisis appears progressive, but it can use the indicators related toenterprises by building the model prediction. Therefore, in order to prevent theserious consequences of financial crisis, creation of an effective early warningprediction model of corporate finances, it is imperative, but also far-reaching.In recent years, many companies there is a serious problem of inefficientinvestment, no doubt, it is also the leading companies in financial crisis, one ofthe incentives, but the introduction of the corporate over-investment indicatorsof financial distress early warning model of less and less. In view of this, wewant to over-investment enterprise to the financial crisis early warningindicators into the model to enhance the model’s predictive ability, and financialdistress of listed companies in China provide a new research perspective.This paper uses multiple linear regression (OLS) analysis method toanalyze the problem of excessive investment, the residuals of that equationand predict that the actual amount of investment the difference between theamount of investment, determined to test this over-investment targets. As explanatory variables into the next generation of empirical models; then thefirst time in2007and2008sample data by ST companies, using an includedtwo-dimensional Logistic establish early warning indicators of over-investmentmodel, the model including the corporate financial indicators, non-financialindicators and indicators of over-investment. The modeling results show thatindicators of excessive investment into financial crisis on whether theenterprise has a significant impact, and significantly improve the predictiveability of the model. Finally, the use of ST companies in2009was first testedon the model sample data, test results show that the introduction ofover-investment in the predictive power of the model greatly improved. Thisover-investment targets will be successfully introduced the Financial Crisismodel.