Abstract: The nature of capital is to hedge against risk. Fund efficiency and financial risk information are not only the basis for capital market to guide capital allocation and capital flow, but also an important basis for governments at all levels to judge the economic operation situation and formulate macro-control policies. Due to the confusion between the concept of capital and assets in the traditional financial analysis system, the lack of differentiation between business liabilities and financial liabilities, and the improper classification of economic activities, the financial efficiency and financial risk information provided by the traditional financial analysis system are seriously distorted, capital efficiency was seriously underestimated, and financial risks were seriously overestimated. Analysis of the data for the listed companies in all industries except financial listed companies for the period of 2008～2017 shows that the traditional financial analysis system makes the capital efficiency underestimated by more than 30%, while the financial risk is overestimated by more than 40%. The real economy, which was originally in a difficult period of transformation and upgrading,has become worse. Serious information distortions have caused the real economy in the capital market to be extremelybadly squandered, and the value of investment has been seriously underestimated, thus misleading the profit-seeking financial capital away from the "low-return" and "high-risk" real economy. Moreover, the traditional financial analysis system also makes the return on capital of operating activities underestimated by more than 40%, while the return on capital of investment activities is overestimated by more than 50%, thus misleading companies’ internal capital market funds flow more from business activities（entity operations） to investment activities（capital operations）. This provides a new explanation for the reasons for the problems of low economic efficiency and level of financial services entities such as"financial de-realization","financial enterprise financing difficulties"and"entity enterprise financialization"that have emerged in recent years. It also provides an important reference for the government to objectively assess the development of China’s real economy under the new economic normal.
- DOI：
10.19744/j.cnki.11-1235/f.2019.0020
- Series：
(J) Economics ＆ Management
- Subject：
Enterprise Economy; Finance; Securities; Investment
- Classification Code：
F275;F832.51
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