Abstract: Financial crisis may have a contagion effect in members of the same group. This paper chooses two or more group holding listed companies as research samples to examine the contagion effect of financial crisis in group companies. Research shows when a member of a group falls into financial crisis, it will influence other member, increasing the possibility of other member falling into financial crisis; improvement of the internal control system can inhibit the contagious effect of financial crisis, the closer the distance between a member and financial crisis enterprise is, the more obvious contagious effect is; the contagious effect of the financial crisis is greater when a member enterprise and financial crisis enterprise are in the same industry, but the effect is only significant in the first and second years of the financial crisis. Considering the contagion effect of financial crisis in business group can effectively improve the prediction ability of financial crisis prediction model.

Key words: business groups, financial crisis, contagious effect, internal control system, geographical distance