A Study of Listed Companies´ Financial Distress Prediction Using Rough Set Conditional Entropy Method

With the development of China´s stock market, the financial situation of listed companies has become a centre that stakeholders concentrate on. Thus, the prediction of financial distress gets popular in corporate management. By establishing some rules, the financial prediction system will follow and analyze the index of financial situation, and make effective alarm before the crisis happen. It´s significant to take measures to manage the corporate finance, especially to establish an effective prediction system. Due to the uncertainty and ambiguity of financial situation, rough set method has a unique advantage in financial prediction for its objectiveness and convenience in data processing. In this paper, a new method based on rough set and entropy will be used to analyze the typical financial indices according to the classic studies. Further more, prediction system will be established.