Abstract
In this chapter, the financial risk is divided into traditional financial risk and earning’s management risk. Based on the analysis of noncorrelation between the traditional financial risk and earning’s management risk, this study puts forward the necessity of establishing a two-dimensional model of financial early warning analysis. We use the special treatment companies and irregularities’ companies in Chinese stock market from 2007 to 2013 as samples and the data of T-1 year to screen indexes by principal component analysis method. Then a discriminant function model is constructed by Fisher multivariate linear discriminant method. We confirm the validity of the model by using the data of T-2, T-3, and T-4 years.
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Wu, P., Gao, L., Wang, Q. (2016). Early Warning System for Finance. In: Foo, C. (eds) Diversity of Managerial Perspectives from Inside China. Managing the Asian Century. Springer, Singapore. https://doi.org/10.1007/978-981-287-555-6_6
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DOI: https://doi.org/10.1007/978-981-287-555-6_6
Publisher Name: Springer, Singapore
Print ISBN: 978-981-287-554-9
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