The Study of Financial Ratios and Corporate Governance on Financial Warning

• Main Authors: Ya-Ting Kuo, 郭雅婷
• Other Authors: 張麗娟
• Format: Others
• Language: zh-TW
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/z5tape

碩士 === 國立虎尾科技大學 === 經營管理研究所 === 98 === Given the fact that a majority of the TSE and OTC-listed companies in Taiwan are family-run businesses, the ratio of institutional investment tends to remain low. As a result, the key powers of these companies are usually held by only a handful of people. Their financial statements are often glossed over and skewed, and the earnings shown in the financial statements cannot accurately reflect the company’s profitability, causing the credibility of their financial statements to be questioned, as they cannot provide any early warning about the company’s business performance. Hence, other than financial variables, this study added in corporate governance variables to construct an early warning model for financial crisis of TSE and OTC-listed companies, in attempt to enhance the predictability of the model concerning early financial warnings. By using stepwise regression to screen variables, followed by constructing an early warning model with binary logistic analysis, the study investigated and compared the predictability of the financial variable model, corporate governance variable model, and the combined model of both financial variables and corporate governance variables, three years prior to the occurrence of a crisis. The empirical results show that the combined model has a higher discrimination rate than the financial variable model or corporate governance variable model alone.