| Summary: | 碩士 === 樹德科技大學 === 金融保險研究所 === 93 === Using Composite Index to build up the Forecast Model
of Corporate Financial Distress
Student: I-Jung Chen Advisor: Dr. Shih-Jen Liao
Graduate Institute of Finance & Insurance
Shu-Te University
ABSTRACT
Corporate financial distress has always been an important issue in the financial field. In the past, the forecast models of corporate financial distress were mainly based on traditional financial ratios. However, a financial ratio is just a “lag index” for the corporate to measure the final performance of the past operation. Physical assets and financial assets listed in the financial statement have no way to display those intangible assets such as human knowledge, organization flow and innovations which create values for the corporate. Therefore, it is insufficient to take financial ratios as the criteria to diagnose corporate financial distress and it’s an urgent step to introduce non-financial index (intellectual capital and corporate governance).
This study suggests, when using forecast model to analyze, the key is not about how good the forecast model is or its forecasting ability, but is whether the explaining variables can actually diagnose the real situation of the corporate. If there is a complete forecast model which provides the coping strategies to prevent and resolve the financial problems the corporate is facing, and stabilizes the development of corporate. Thus, besides considering a financial index, this study also introduced intellectual capital and corporate governance into Logit Model to build up a financial distress warning model which is more complete and meets the needs of knowledge age. The empirical result shows: the accuracy from the model consisted of composite index, corporate governance index and intellectual capital index is better than those from any single-indexed model and any binary model of financial index and corporate governance index.
Key words：financial distress, financial ratios, intellectual capital, corporate governance, Logit model.
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