Research on the Financial Crisis Early Warning of Listed Companies in China—Based on Probit model and Logit model
3
Citation
0
Reference
20
Related Paper
Citation Trend
Abstract:
The article selects 12 financial indicators from the six aspects of listed companies' profitability, operating capacity, solvency, growth capacity, cash flow and capital structure to construct Probit model and Logit model to study the financial difficulties of listed companies in China. The results show that earnings per share, equity ratio, interest protection multiples and inventory turnover ratio have a significant early warning effect on the financial distress of listed companies in China. The Probit model has a prediction accuracy rate of 78.31% for whether the company will fall into financial difficulties, and the Logit model has a prediction accuracy rate of 92.18%. The Logit model's prediction ability is significantly better than the Probit model.Keywords:
Probit
Ordered probit
Multivariate probit model
This research work is aimed at the estimated two regression models, with which it is intended to measure the fragility of Ecuadorian companies. Development and scope of the proposed objective, the information in the financial statements of 34.575 both large companies are used, medium, small and micro enterprises that are controlled and monitored by the Superintendency of Companies in 2013, plus a selection of be held companies for the development of this work because the account information is limited for some companies in the total sample used in this study is of 22,854 companies. The methodology used in this work is to estimate two models of discrete selection: Logit and Probit. With the information available balance sheet financial indicators were useful as explanatory variables in the models posed regression, from which relevant financial ratios such as ROA, ROE and liquidity are identified were built, use is also made of financial gaps of patrimonio-debt and cash for measuring the fragility of companies. The results show a negative influence Slacks used, as in this case increase the fragility of Ecuadorian companies into bankruptcy, a positive value of ROA equally evidence the probability of default on payment obligations as they thus it reduces profitability increases the fragility of a company into bankruptcy, while a positive value of ROE reduces the brittleness of the company.
Financial fragility
Probit
Probability of default
Cite
Citations (7)
The recent studies on financial distress are mostly confined to static econometric or statistical methods based on cross-sectional financial data ,and it is ignored that the variation of companies' financial status is a dynamic process. In order to show the change of companies in financial position, this study constructed the financial distress prediction model based on panel logit. On the selection of variables,we select not only financial ratios,but also indexes on ownership concentration, corporate governance and audit opinion. Empirical results indicate that the probabilistic predictions generated by the panel logit model can provide a measure of the company's financial position.
Financial Distress
Position (finance)
Ordered logit
Proxy (statistics)
Cite
Citations (2)
The recent studies on financial distress are mostly confined to static econometric and statistical method based on cross-sectional financial data,and ignore the fact that the companies' financial status is a dynamic process.In order to show the change of companies in financial position,the paper established the financial distress prediction model based on panel logit.Empirical Results indicate that the forecast accuracy of panel logit model is better than ordinary logit model.
Financial Distress
Ordered logit
Position (finance)
Panel analysis
Cite
Citations (1)
In this paper,the listed companies of China from 2005 to 2007 are studied,the Logit model is used to conduct an empirical analysis of financial early-warning for listed enterprises,and then the effect of the models are tested.The results show that the logit model can be used to predict if there is a financial crisis for the listed companies one year later.
Listed company
Ordered logit
Cite
Citations (0)
Using as variables financial indicators of A-share listed companies in China for 2002-2004,this paper establishes a probit model for financial failure forecasting.Through step-by-step selection of 20 financial indicators,it is found that net interest rate of total assets,assets-liabilities ratio,and accounts receivables turnover are effective predictors of financial failure at listed companies;overall,the model has an accuracy rate of 86.7% in prediction.Also analyzed are marginal effect of variables and misclassification costs.
Multivariate probit model
Ordered probit
Cite
Citations (0)
The recent studies on financial distress are mostly confined to static econometric method based on cross-sectional financial data,and ignore the fact that the companies' financial status is a dynamic process.In order to show the change of companies in financial position,the paper established the financial distress prediction model based on panel Logit.On the selection of variables,we select not only financial ratios,but also indexes on ownership concentration, corporate governance and audit opinion.Empirical Results indicate that the forecast accuracy of panel Logit model is very high,so we can forecast the financial distress probability of next year by the current year's data.
Financial Distress
Ordered logit
Position (finance)
Cite
Citations (0)
With the development of Chinese stock market, more and more attentions have been paid to the prediction of financial risk of listed companies. So far, our studies on financial risk prediction model have achieved a lot, but the rest ill existed some faults because of the limitation of surrounding conditions, the most prominent of which was the simplification of variables selection. Theoretically, earnings per share(EPS) can reflect the profitability of firm most, but operating cash flow per share can reflect the quality of EPS most. In addition, firm's cash numbers can be influenced by the change of market and financial environment directly, so we can decide and measure the financial risk through the comparison of cash flow during a certain period. This article expects to make progress on financial risk prediction model by taking cash flow information into account.
Cite
Citations (0)
In this paper we propose a financial distress early warning model based on panel logit model theory according to the trend of time series data and historical data on the results which is creative in the field of finance.Manufacturing listed companies as the samples,panel logit model analyzes the factors influencing their financial distress.The empirical results show that debt factor,profitability factor,operating factor,capital utilization factor,capital structure factor are negatively related to financial distress of the listed corporations.
Financial Distress
Cite
Citations (0)
This paper applies statistics methods to select effective variables to build Logit model to predict financial distress in Chinese listed companies. Research result indicates that accuracy of this model is good and it can be applied as an effective predicting tool of financial distress by securities investors and analysts.
Financial Distress
Listed company
Empirical Research
Cite
Citations (0)
Current ratio
Cite
Citations (29)