A Research Of Prosperity Index And Early Warning System Of Real Estate Industry Based On Accounting Information

Financial early warning is a topic of widespread concern at home and abroad theory and practice.As a business’s running lights, investors’warning and the "barometer" of economy, financial early warning not only has great theoretical significance, but also has a strong application value.The past two years,many researches on corporate financial early warning discussed from a different angle deeply,achieved fruitful results.However, some research has been mostly for the whole industry.There is a big difference between the different sectors in the operation, management and operation of real life.In the whole market as the object for financial early warning analysis, there are some general nature inevitably.Therefore, in order to obtain a more accurate early warning indicators and early warning models, we must be combined with its own characteristics of each industry.Compared with other industries,the real estate industry has the typical characteristics of high investment, high-risk, long cycle, high-yield, high-sensitivity and so on.Because the real estate industry of our country starts late, its infrastructure is poor,and our financial system is inadequate,makes a lot of real estate companies face higher financial expenses and debt ratio,even some companies’ debt ratio has been as high as 90%. This will affect the company’s profitability to a certain extent,may even make enterprises have the situation of funding shortfalls and ends meet,even fall into financial crisis.Especially since entering in 2008,state has increased its macro-control efforts to the real estate industry,trying to cool the "overheating"real estate market.Tier cities’ housing prices go down,the living environment of the real estate business had a sharp deterioration in, the possibility of financial crisis also increased.Therefore there is a need to establish financial early warning system that allows real estate companies to detect own problems early and prevent risks as soon as possible.However, China’s real estate listed companies in the financial crisis early warning is still in a starting stage,lack the appropriate early warning mechanism,coupled with some companies’ special background and the relative complexity of the system’s establishment,companies are able to apply financial crisis early warning system in business activities are still a very small part. In addition, because the real estate industry involves a wide range of industry-wide,once the real estate industry is in crisis,it will be implicated in the large numbers of industry,and even endangers the stability of the development of the social economy, the US subprime mortgage crisis is proof.Therefore, the establishment of the real estate company’s financial early warning system has very practical significance.To sum up the reasons, when faced the above situation,real estate companies must first do the financial crisis early warning well, so when faced external economic and policy environment, the companies can deal calmly and maintain the status.Therefore, the establishment of real estate listed companies’financial crisis early warning model to help companies keep abreast of their financial situation, identify potential financial crises and prevent the occurrence of the financial crisis are very necessary for the company’s management as well as for various stakeholders.This paper is divided into six parts:The first part introduces the background and significance of this paper,then generalizes and summarizes research results from prosperity index and early warning systems on two levels and reviews it.Finally, outlines the main contents and methods of this paper.The second part is the theory of prosperity index and early warning.First it describes the concept of prosperity,prosperity index,early warning and financial early warning, then does a theoretical overview on two levels:First, prosperity index level;second,early warning system level.Among them, the theory of prosperity index are mainly economic cycle fluctuations theory and index number theory;the theory of of early warning systems are mainly corporate crisis management theory, enterprise risk management theory, corporate adversity management theory and corporate diagnosis theory.The third part is an overview of China’s real estate industry.This section introduces the concept and characteristics of real estate, the current development of the real estate industry and the development features of China’s real estate industry.The fourth part is the analysis of prosperity index and its correlation of real estate industry based on accounting information.First it introduces the building mechanism of the real estate industry’s prosperity index based on accounting information.Then it specifically describes the establishment process of the real estate industry’s prosperity index based on accounting information.Finally, it briefly introduces the prosperity index of real estate industry compiled by the National Bureau of Statistics,and based on these two types of prosperity index, correlation analysis were made between them.The fifth part is the construction and analysis of real estate industry’s prosperity warning system based on accounting information.On the basis of the fourth chapter’s study on prosperity index,this chapter references a series of cash flow indicators and non-financial indicators of listed real estate companies, constructs a prosperity warning system,and then makes a factor analysis and Logistic regression analysis.Finally according to 2013’s data we test the accuracy of the model, proves the model constructed in this paper is suitable for early warning analysis of the real estate listed companies.The last part is the conclusion and recommendations.This part firstly gives the conclusions of this study, and based on this proposes the recommendations of financial early warning analysis for real estate listed companies from the macro and micro levels in the future.The innovation of this paper is to construct boom index which can reflect the status of the enterprise prosperity according to financial indicators of the real estate listed companies,and includes this boom index in the financial early warning model. Integrating other financial indicators and non-financial indicators, it builds an early warning system to fully reflect the companies’ development, in order to identify the financial crisis and to further avoid the occurrence of financial crises.The inadequacies of this paper are,firstly, using only a series of internal indicators of real estate listed companies to establish financial crisis early warning model, not considering the impact of external environmental factors.Secondly, the choice of non-financial indicators are not comprehensive enough.Non-financial indicators are already counted, easily quantifiable indicators from GTA database.Furthermore, at the data level, although the amount of data in this article is large enough, but all the data used are from the real estate listed companies, this way it makes the results with a certain one-sidedness.Therefore, the research conclusion does not necessarily conform to numerous small and medium sized real estate companies as well as large real estate companies which are not listed.At last, due to the situation of accounting information’s distortion of the public company in today’s society everywhere, enterprises’ financial data is vulnerable to manipulation and fraud.For those listed companies having financial data fraud, the early warning model of financial crisis constructed in this paper can not make a good prediction.