Empirical research on financial distress early warning based on ternary Logistic model

Most scholars applied dichotomy to the company financial distress research, which classifies listed companies into two categories. We apply trisection method, which classifies listed companies into three categories: financial distress companies, financial unstable companies and financial healthy companies, and apply principal component analysis method and ternary Logistic model to construct a financial distress prediction model. The empirical results indicate that the financial distress prediction model based on ternary Logistic model has better forecast ability and lower misjudge costs.