Research on Financial Risk Early Warning of Listed Companies Based on Stochastic Effect Mode

Abstract

In the current era, the market competition is becoming increasingly fierce, complicated and unpredictable. Based on the interaction of various factors, the probability of financial risks of listed companies is significantly improved. Because of its unique characteristics, the listed companies’ operating status affects the overall operation of China’s market economy and occupies a fundamental position in the national economic system. If listed companies have financial risks, it will cause great trauma to our economy. Based on the financial risk evaluation theory of listed companies, this paper analyzes the financial indicators of listed companies through random effect model, and puts forward the risk analysis and prediction index system of listed companies from theoretical and empirical angles, thus constructing a financial risk early warning model based on linear random effect model, and studying the financial risk early warning of listed companies with practical cases. The research results show that the financial risk early warning model of random effect model is feasible and effective, which can help listed companies to carry out financial risk early warning management and improve financial management level.

Keywords

• random effect model
• financial risks
• listed company