Abstract: Based on a simplified rational investment model of financial distress firm,the paper analyses the characteristics of firm that fall into financial distress in investment decision.It will deviate from the reasonable investing behavior during the process of between the option gamble of creditor and the debtor.On the basis of the analysis,the author emphasizes the excessive investment of financial distressed firms during the transformation of economy pattern in our country and blindness,shourt term,and utilitarian in the debt reorganization.The excessive investment is the embodiment of insider control and the weakness of creditor’s right of bank.And the false debt reorganization is the real driver,which transfers the crisis to the business creditors.

Key words: financial distress, excessive investment, debt reorganization, model