Analysis Of Correlation Between Internal Corporate Governanceand Financial Distress Of Chinese Private Listed Companies

Private listed companies on the capital market are becoming an increasingly compelling body and play a more and more important role in China’s economic development, but there are a growing number of private listed companies in financial trouble so as to be special treated. Proving the underlying causesand making the correct prediction of financial distress of theprivate listed companies has become an urgent problem to be dealt with. Firstly, the paper is stared with a literature review and assessment on financial distress, which leads to the main point of this article, that internal corporate governance and financial distress are relevant. Then, we draw on existing research results of the definition of financial distress. That being treated special is a sign of financial distress. In this paper, board characteristics, ownership structure and management incentives are used to describe three aspects of internal corporate governance. This paper selects the internal corporate governance data of private listed companies from 2009 to 2013 which was special treated. Before using empirical methods to make an analysisof the correlation between financial distress andinternal governance, do the company’s data sample T-test and make a descriptive statistical analysis. Index that has significant difference will be put into the model whichis based on the results of the first tests. Then according to the results of tests and analysis, we will conclude the empirical research. Finally, according to the research findings, the actual situation of China’s private listed companies and experience from the good financial condition company, the paper comes up with someadviceson internal corporate governancewith the hope to find a way to timely address the plight in advance to avoid financial distress occurring.