Predicting Chinese Listed Companies' Financial Distress Through Censored Quantile Regression Approach

In a market economy, it is a problem worthy to be discussed which is quite studied to predict the listed companies bankruptcy after the first time of listing in the field of economy and accounting. Therefore, companies can take measures to correct financial strategy through reasonable financial risk analysis methods in order to effectively prevent and control financial risk. It is extremely important for long-term development of Chinese Listed Companies. Since our country did not implement the unified accounting standards until July 1,1993, the scholars' predictive study of listed enterprises is relatively backward. Therefore, it's a key issue to make forecasts by combining the characteristics of our country.Firstly, this paper has illustrated the theory of financial distress, introduced the research methods of financial distress, and summarized the studies conducted by the scholars by applying the basic theories. Secondly, this paper has illustrated a regression model of censored quantile regression, which includes the basic form, parameters estimates, and survival rate estimates of the model. At last, it has illustrated the basic theory of survival analysis, which includes the survival time, data characteristics, the relationship of basic function, and Cox proportional hazards mode. Based on the financial data of the Chinese listed enterprises, a forecast model of financial distress has been established in this paper, which is the application of censored quantile regression model and Cox proportional hazards model. And it has conducted a research on the financial distress of the enterprises in China. Enterprises of "ST" are defined as that of financial distress; an empirical study has been conducted from the two aspects-the influence factors of financial distress and prediction of distress.Innovation of this paper is that we apply censored quantile regression model into survival analysis. The regression quantile coe?cients are interpretable as direct regression e?ects on the survival time, thus we can obtain the more information about the conditional distribution. We can get the information of the factors which effect the listed companies' financial distress and the risk prediction of the listed companies' financial distress. The empirical results show that the censored quantile regression model performs better than the Cox proportional hazards model in the study of financial distress. The censored quantile regression model has broad in the field of financial risk management in China.