Information Content of Cash Flow in Early-warning on Financial Crisis and Firm Operation

摘要

In this paper, adopted is the financial crisis early-warning model which takes cash flow as the main index in data regression of listed companies from 2006 to 2010 and it also discussed the relationships between firm characteristics such as the proportion of state-owned stake in the firm, the proportion of the tradable shares of the firm and firm type and cash flow index, as well as between firm financial situation and firm value. Through the discussion, it is found that Cash flow index contains fairly strong information content in the financial earlywarning system and the more closer of the prospective year is, the information content will be higher; in similar conditions, firms with higher proportions of tradable shares compared those with lower proportions, owns more free cash flow; diversification of investment in most of Chinese firms cannot increase firm value.