An Empirical Study On Influencing Factors For The Financial Performance Trend Of Chinese Listed Companies

Financial performance is an issue most concerned by the stakeholders. It is the most stakeholders. Financial performance trend fall is the warning sign of the financial distress. It can make a warning before companies are in financial distress to study the factors of financial performance trends of listed companies, which reduces the risk of falling into the financial distress for the companies and avoids huge economic losses for the stakeholders.In this paper, we use the empirical research method on the base of related research results. We choose 714 data from the listed companies on the stock market of Shanghai and Shenzhen during 2011 to 2013, half of which are study sample on the criterion that the company’s ROE(return on equity) declines beyond 50%, and another 357 are the paired sample with the company’s ROE(return on equity) rises beyond 50% in the fiscal period of half an year.We totally choose 35 indicator variables as explanatory variables from six categories, including short-term debt paying ability, long-term debt paying ability, operating ability,development ability, cash flow capacity and shareholdersprofit ability. First, we exclude inappropriate indicators between the sample group with the remarkable decline of financial performance trend and the sample group with the remarkable rise of financial performance trend by Wilcoxon signed rank test on index data differences. Then we make a factor analysisfor the index data using SPSS software to eliminate the multicollinearity among the index variables; we build up the regression of binary logistic model taking the variation trend of ROE as explained variable to analyze the factors of financial performance trends. Finally, we make a conclusion that the index variables from short-term debt paying ability, operating ability, cash flow capacity and shareholdersprofit ability have a significant negative correlation relationship. And we verify the hypothesis in the paper. In order to investigate the impact of non-financial factors on the financial performance trends, we select 8 variables from ownership structure, corporate governance and incentive mechanism. We conclude that non-financial factors are not significant to the financial performance trend with using paired sample T test.At the last, I make a summary of this paper, and recommend some suggestions. I hope that my study can make a contribution to financial analysis for the investors and corporate governance for the management.