The Research Of Financial Early Warning Introduced With The Quality Of Information Disclosure Under The Enterprises' Life Cycle

With the sustained development in economy and rapid growth in capital market, the uncertainty and complexity of exotic environment in front of the enterprises are becoming increasingly prominent, so are the investment risk and the impact on financial risk. Therefore, for the quoted companies, in order to combat the possible financial risk, they must grasp their own financial standings. Regular evaluation of the state of operation is also needed to ensure the scientization in decision and sustainable development. Under such circumstances, the precise warning of financial crisis has been widely concerned. At the meantime, the lack of standardization and transparency in the information disclosure has badly bruised the interests of investors and also hindered the methodical operation of the securities market. Financial index, as the input variable of the finance early-warning model, normally stems from financial statements, its precision is of great value to the accuracy of early-warning model. Untruthful and inaccurate information disclosure would substantially reduce the accuracy in warning. Therefore, it is necessary to investigate the effect of the quality of information disclosure on financial early warning.Herein, basing on the financial early warning related theories and starting from the perspective of an enterprise's life cycle, four stages were divided, i.e. leading-in stage, growth period, maturation period and recession. The panel data from the manufacturing listed companies in Shenzhen Stock Exchange between 2010 and 2013 was taken as the research sample. Up to 20 financial indexes were selected, which came from five domains, including debt paying ability, operating capacity, profitability, growth potential and cash flow. The final financial early warning index system was determined following the feature selection conducted by m RMR. This study employed the Support Vector Machines(SVM) financial early-warning model to investigate the difference in the accuracy of financial crisis prediction with or without the introduction of the quality of information disclosure. Moreover, in order to estimate the importance of the quality of information disclosure on the financial early-warning system in different stages of an enterprise, the analysis of the related output indexes of SVM model by using the decision tree model were carried out.It was shown that the effect of information disclosure on the financial early warning was not ineffectual in the leading-in stage. The empirical results showed that without the partition of life cycle, the introduction of the quality of information disclosure led to substantially improved accuracy in the financial crisis forecast using SVM model. While with the partition of life cycle, the quality of information disclosure enhanced the prediction accuracy in the entire life cycle, except for the leading-in stage. In addition, as for the results obtained from the analysis of the related output indexes of SVM model by using the decision tree model, the impact of information disclosure on financial early warning showed marked difference in different stages of the life cycle. The greatest influence was found on the maturation period, followed by the growth period and recession. It was obvious that high quality of information disclosure can markedly reduce the probability of financial crisis and vice versa. Therefore, for the quoted companies, improving the quality of information disclosure is conducive to arouse the inner motivation to disclose information actively and also of great importance in minimizing the probability of the occurrence of financial crisis.