Research on Listed Firms´ Financial Distress Pre-Warning Based on a Longitudinal Data Envelopment Analysis

As listed firms´ financial distress is not always occasional, it is necessary to consider dynamic change of the firms´ financial condition when the firms´ financial distress is pre-warned. In this paper, a longitudinal data envelopment analysis is employed to consider dynamically the listed firms´ financial condition, and every listed firm in various periods is viewed as various decision making unit. Firstly, make certain a window which means one period. Secondly, evaluate the decision making units in every window with data envelopment analysis and make an estimate of dynamic change of every decision making unit´s financial condition to pre-warn decision making units´ financial distress. And then an empirical case shows the feasibility and validity of the method that is put forward in this paper.