Study On Financial Risk Early Warning Of Energy Conservation And Environmental Protection Industry Listed Company In China

Energy conservation and environmental protection industry as one of the sevenemerging strategic industries has a rapid development under the policy guidance, andthe financial risk management issues become increasingly prominent. In the pastfinancial risk early warning research, the majority of researchers have focused onwhole listed companies, and few have paid attention to a specific industry.Thisarticle based on both the theories about financial risk and financial early warning,and the reviews on research home and aboard, and relied on the public data that thelimited company of energy conversation and environmental protection industries hasreleased. this paper analyzes the current development situation, characteristics andthe risk that the ECEP industry has faced. There has necessity and possibility tobuild the financial risk EW mechanism in the ECEP industry according toconducting the empirical research.This article selects110listed companies from energy conservation andenvironmental protection sector as research samples. Unlike previous specialtreatment as sample classification standards, this paper introduces the theory of valuecreation， and takes EVA as sample classification standard, which solves therelationship that the number of index restricted by the number of samples in statistics.On the basis of summarizing the theories and research methods on financial riskearly warning home and abroad, and combining with the current situation of listedcompanies in energy conservation and environmental protection industries, thispaper selected fundamental indicators in the terms of both18financial and4non-financial indexes. Firstly, it filtered indicators into the model which are significant differences in the two sets of samples by the normality test and test ofsignificance; Secondly, by means of Dimension Reduction Factor Analysis, turnmultiple variables may exist co-linearity into few comprehensive index; Lastly,With integrated indicators derived from factor analysis, construct logistic regressionmodel in different years, and establish the financial risk early warning models ofenergy conservation and environmental protection industries listed company.After empirical research and the establishment of annual financial risk earlywarning model, this article come to the conclusions as bellow: energy conservationand environmental protection industries listed company is ST rarely but a largenumber of financial position is sub-health. In energy conservation and environmentalprotection industries listed company, the profitability, short-term debt-servicingcapacity, free cash flow and development capacity are primary influencing factors offinancial risk. Capable of energy conservation and environmental protection industry,the financial risk of a listed company effective early warning factor analysis and theestablishment of financial early warning model based on Logistic Regression, anddifferent predicting effect of warning model in different years. Most energyconservation and environmental protection industries listed companies grow verywell and have a great overall operation. But in the aspects of technologicalinnovation and technological industrialization, it is necessary to learn fromdeveloped countries.