Study On Causes And Governance Of Financial Distress Of Listed Companies

With the rapid development of China's national economy,listed companies as an important part of the domestic economic market,its role is increasingly prominent.In the 21 st century,although the overall strategic behavior of Chinese enterprises is different,diversification strategy is still an important strategic choice for Chinese enterprises.Due to the excessive pursuit of diversification,the enterprise operation and capital turnover are hit.Letv is A typical example of this.As the earliest listed company in the world industry and the earliest listed company in China's a-share market,letv has attracted investors' attention,with A market value of 150 billion yuan in 2015.However,since November 2016,the situation of letv's payment arrears to its suppliers has continued.As a result,the image of letv plummeted,the stock price plummeted,and the cash flow was tight.Today,letv is still not out of financial difficulties.Is diversification the most important factor in the bankruptcy of enterprises that implement diversification strategy? How can the diversification strategy work best?What factors will affect the implementation of diversification strategy? This article will cash flow will not be able to completely offset company debt as a sign of financial distress,sum up method,comparative analysis,theory and case combination with three methods,based on the academic researches of the financial difficulties of the listed companies,the music of the financial predicament of networks and the measures are studied,help the company for financial distress prediction and response to,help the government functional departments to better grasp the financial difficulties in the influence of market economy,perfect the market regulation system.The findings are as follows :(1)the process of financial distress is a gradual transition from good to bad financial situation.It is usually manifested in the form of excessively high asset-liability ratio,continuous decline of cash flow and net profit or even negative,and sharp decrease of operating income.(2)there are many reasons leading to financial difficulties of listed companies.Overinvestment is the primary factor leading to financial difficulties of letv.(3)reorganization is a necessary measure for listed companies to cope with financial difficulties.Through reorganization,especially asset reorganization and management change,it is a useful means for financial distressed companies to get out of difficulties.This paper believesthat the company can prevent financial distress through the following reforms :(1)optimize the internal governance structure of the company,ensure the proportion of independent directors among the directors,establish a strategy committee,and ensure the balance of power;(2)focus on developing core business,eliminate non-performing assets and improve market position;(3)strengthen the internal control of the company's management to improve the company's management efficiency;(4)strengthen the construction of relevant legal system to protect the rights and interests of minority shareholders.