Causes and Early-warning Model Analysis of ST: Comparison based on Financial and Non-financial Indexes

Wu Xihui

COMPUTER MODELLING & NEW TECHNOLOGIES 2014 18(12C) 843-846

Department of Economy and Management, Henan Polytechnic Institute, Nanyang city, Henan Province, China. 473000

ST is the special treatment of stock exchange to all enterprises with management problems, which all listed companies concern and try to avoid. Although ST generally involves financial problems, it is influenced by both financial and non-financial factors. As a result, a ST early-warning model was established in this paper based on financial and non-financial indexes of enterprises. The established model includes 14 financial indexes (e.g. profitability, debt paying ability, growth potential, operation and management, as well as utilization of assets) and 15 non-financial indexes (e.g. ownership structure, board size and composition, major connected transactions of enterprises and investor protection). Both Z and P of the model can reflect risks of ST. This paper analyzed 9 conditions and ST possibility of enterprises with different Z values for two successive years according to their practical situations. To avoid ST, enterprises are suggested to discover risks promptly and improve their management, organizational structure and cost control.