Research And Analysis On The Risk Of ST Recurrence In Listed Companies

The Special Treatment System(ST)is a transitional policy before the stock delisted of China’s stocks.Its purpose is to specifically mark the stocks with poor operating conditions,especially with abnormal financial status,control daily fluctuations of the stock price,control the securities market risk,suppress excessive speculation and protect the interests of investors.To strengthen the supervision of listed companies,the China Securities Regulatory Commission introduced a special treatment system,a special market delisting and early warning mechanism in March 1998,which implemented special treatment for listed companies with abnormal financial status or other conditions,which makes listed companies ST.If the ST listed companies turn losses into profit within two years,it can successfully graduate and cancel being "ST".Otherwise the companies will face the risk of delisting.Since the implementation of the ST system,a considerable number of listed companies have been “ST” every year.Due to strict conditions imposed by the listed company and brought huge advertising effects and economic benefits,the company facing the risk of delisting will spare no effort to protect to stay listed.In addition,as a scarce resource,listing companies will also buy and sell “shell resources” through asset restructuring,and the speculative atmosphere will be quite strong.In order to curb speculation in the secondary market and regulate market order,the government urgently needs to implement the delisting system.However,the listed company turned losses into profits,and the smooth graduate did not mean that there was nothing wrong with it.It turns out that many listed companies will still experience the second and even the third ST after canceling the “ST”.The number of companies which have been “ST” is extremely common.However,there are few studies on ST recurrence events in China,and even few studies on the risk of ST recurrence using survival analysis.Therefore,this study using the survival analysis method not only find out the distribution of survival time of ST recurrence events,but also analyze the influencing factors and extent of ST recurrence risk by the Cox risk scale model,which is of great practical significance and necessity.Since the special treatment system is established by China’s capital market to protect the rights and interests of investors and to address the specific conditions of China’s stock market,it is a special unique system of stock market in the world.Therefore,the research on ST companies is mainly focused on the early warning of the company’s financial crisis.In addition,domestic scholars have done a lot of research on the prediction,prevention,governance and governance effects of financial distress,to study how to prevent listed companies from being ST by and how to succeed capped after ST,but the studies of after “caps” is rarely concerned.This study is focused on the risk of recurrence of ST.Through study of the mechanism of ST recurrence events,the life table and Kaplan-Meier estimation method in survival analysis were used to analyze the recurrence risk of ST events and the Cox proportional hazards model was established to obtain the important factors affecting ST recurrence events in listed companies.Finally,put forward important countermeasures and suggestions for the long-term development of listed companies,the behavior of investors and the national market policies.This study selects the listed companies that have been at least "ST" more than twice since the implementation of the ST system in 1998.Through studying the time and development history of these censored events,the life table and Kaplan-Meier in the survival analysis are used,describing the risk of recurrence of ST in detail.Used descriptive statistics,non-parametric rank sum test and Lasso variable screening method for related indicators that may affect relapse ST,screened out important indicators that may affect the risk of ST recurrence,and established the Cox ratio.The risk model was further studied to find important factors affecting the risk of ST recurrence.Finally,the results of the Cox proportional hazard model were used to predict the risk of ST recurrence in listed companies under different classifications.According to the research,the following conclusions can be drawn: The risk of ST recurrence in companies listed before 1998 which in the implementation of the special treatment system,industrial listed companies and listed companies with a book value of 1 to 6 billion RMB is relatively high.Among the company’s financial indicators,the surplus cash protection multiple will increase the risk of ST recurrence,while the net income operating index,return on assets and free assets ratio indicators will reduce the risk of ST recurrence.For non-financial indicators,S index and company executed times will increase the risk of ST recurrence,the top three executives’ compensation will reduce the risk of ST recurrence.In addition,the time required for a listed company to “catch the hat” for the first time will reduce the risk of ST recurrence,and the first 6 years after the first ST successful “cap removal” of the listed company is the year with the highest risk of ST recurrence.After the company’s first ST successful “caps”,it does not mean that the situation will be fine afterwards.On the contrary,it indicates that the company has a high risk of ST recurrence.Therefore,it should pay special attention to the first ST of the listed company after “scratching the hat” in six years,strangled any abnormalities in a cradle in time,to avoid the turmoil in the capital market.