Multiple Case Study On Financial Early Warning Of Corporate Bond Default

With the rapid development of China's bond market,bond,as a direct financing method,plays an increasingly important role.At present,China's stock market is equivalent to five times the size of the stock market.In the background of the global economic downturn,China's economy has entered a "new normal",China's bond market in the rigid honor myth was broken,many bond defaults have burst.Defaults involved all varieties of units and bond types,the amount of defaults was large,caused widespread concern and panic of investors.It is of great significance to study the financial early warning system of bond default,which will bring huge losses to investors.This paper took default as a manifestation of the financial crisis,analyzed the operating status and financial situation of default enterprises from the perspective of investors,and by summing up the default features,constructed a set of financial early warning system to provide reference for bond investors to prevent the risk of default effectively.Based on the analysis of market development of China's bond market and bond default status,this paper selected 7 typical default enterprises as the study objects,summarized characteristics of enterprises bond defaults by comparative analysis from perspectives of the industry,the company's strategy,accounting,finance,corporate governance,and external rating opinions.A set of financial early-warning system was constructed and verified by another default example.Finally,this paper put forward some policy suggestions.Based on the Harvard Analysis Framework,this paper analyzed enterprise bond default features and drew the following conclusions:first,debt default has stages and process,the situation of default businesses is deteriorating step by step,so there were some financial trajectories before defaults.Second,the specific features of enterprise performance in the bond defaults before default are as follows:(1)macroeconomic growth had seen a downward;(2)enterprises was in the industry of overcapacity and procyclicality;(3)enterprises adopted expansion or diversification development strategy;(4)the enterprise accounting information disclosure was not timely,the quality was doubtful;(5)audit opinion of financial report was non-standard audit opinion;(6)the Z-score value of enterprise was in bankruptcy interval;(7)financial indicators deteriorated year after year,worse than the industry average,the total equity reduced,cash flow was in short;(8)the structure of corporate governance was confused,shareholders' behavior stripping,equity dispute and changes in business executives had bad effect to business management;(9)external rating opinions gradually adjusted to lower degrees.Third,the phenomenon of bond default was regular and predictable,and a financial early warning system can be set up.