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Correlation Analysis of Shell Resource Value to Loss-firm’s Share Price

Author: GaoZhan
Tutor: PengShaoBing
School: Southwestern University of Finance and Economics
Course: Financial Management
Keywords: Loss making companies Stock price Resources value Correlation Analysis
CLC: F830.91;F224
Type: Master's thesis
Year: 2009
Downloads: 55
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Abstract

Research purposes in accordance with the financial theory, loss companies, particularly the consecutive losses of the company's stock price should be low, because in the case of continuous losses, accounting earnings is not a substitute for cash flow to estimate the value of the company. This company or bankruptcy liquidation, or be acquired by another company, and its stock will no longer be decided by the future of the company's accounting earnings, but should be decided by the book value of the net assets of the company. From the reality of the situation, however, the share prices of listed companies in China is clearly not in line with the general financial theory, the loss company's share price is significantly overestimated. How to explain the the losses listed company's share price abnormal phenomenon? A popular view is that the system of special securities issued under the impact be resources value loss due to the issuance of the shares issued administrative intervention and monopoly of listed companies. Since the existence of the resources value, even if the losses will also be given to support the value of the \The purpose of this research is to solve two problems, the first is to hope that the impact analysis of why the the resources value be losses of listed companies, and the second is to try to verify this effect from an empirical perspective from theory. The first point, we start from the shell resource value of the stock issuance system, reveals the nature of shell resources, and influencing factors of the theoretical analysis of the reasons for the formation of shell resource value and the resources value, which is the following empirical research lay the foundation. For the second point, the paper losses of listed companies from 1999 to 2005 as an empirical test sample companies, the and Olsen model based on the agent variables and control variables that reflect the value of the shell resources, the use of multiple linear The regression equation simulation. Empirical test theory to explain the empirical evidence is given by the losses of listed companies in the stock price and the resources value. The main content and perspectives in the Chinese stock market losses of listed companies in the stock price does not necessarily lower than the profitability of the company's share price, the share price of some of the companies in which the losses even ST company rather than the profitability of the company's stock price. In order to explain this anomaly, this paper introduces the concept of shell resources on the resources value the presence of the listed company even if the losses will get the value of support \The share prices of listed companies and related resources value empirical test of the above interpretation of the empirical evidence is given. This paper is divided into six chapters, the main points are as follows: The first chapter introduces the research motivation, purpose, ideas and thesis framework. Loss of listed companies in China's stock market, the stock price is relatively unusual, common sense, the company's share price to a certain extent and its earnings per share is proportional share, surplus company's share price should be greater than the earnings per share of stock, loss The company's share price should be lower than the profitability of the company's stock price. But from the historical point of view of the Shanghai and Shenzhen stock markets, the losses of the company's stock price but abnormal, then how to explain the anomaly? Article summarizes three popular explanation: The first explanation is that investors under the company back to profitability the possibility of the company is divided into a continuous-related losses and temporary loss of the company, investors considered the possibility of temporary loss of the company back to profitability very large, so the temporary loss company valuation. A second explanation that investors will see through is the cause essentially no loss of listed companies accounting loss due to the accounting standards are in fact such companies operating in good condition or growth prospects are very good, so investors such higher valuation of the company. The third explanation is that the system in China, under the the listed issuers monopoly resources value, resulting in losses of listed companies price anomalous. The second chapter is a literature review chapter, this chapter first summarized the company's share price of loss factors and resources value research literature, and the results of their research were evaluated. This paper argues that extensive research Although the researchers to live in the company's share price of loss factors and resources value, but also researchers to combine the two, from the point of view of the resources value analysis of its impact on the stock prices of the companies in which the losses From this perspective, analyzes the relationship of the losses of the company's share price and the resources value. The third chapter is the theoretical basis, this chapter first describes the institutional background related to this study, the characteristics of China's securities market Issuance System Evolution from the examination and approval system to the approval system, and elaborate on the existing securities market issued approval system , administrative intervention and monopoly issue stock issuance is the root cause to generate resources value. On this basis, this article focuses on the theory of knowledge resources value, defined the concept of shell resources, pointed out that the shell resources is listed on the listing and trading of the company's qualifications, the shell resource value in the stock market due to the listing eligibility is resources value. This chapter from the theory of rent-seeking start parsing the nature of the shell resources, and then analyze the reasons for the formation of the resources value, stock issuance examination system is the root cause of the formation of the shell resource value, while the single is also a resources value of the current situation of the capital market and financing channels for the formation of an important reasons. Finally, we analyze the resources value factors: asset quality, control over the supply and demand relationship, laid the theoretical basis for the following empirical research. The fourth chapter describes the empirical model of this paper, - Olson the model, Olsen on the basis of the assumed investment project NPV is zero, the stock price is expressed as the present value of the normal stock surplus and unexpected earnings present value and the carrying value of the net assets represent the present value of future normal surplus. Therefore, the value of the company's book value of its net assets plus the present value of expected future abnormal earnings. This paper describes the basic idea, the assumption of the model derivation, empirical testing, model evaluation and superiority in equity valuation. Shell resource value theory is then combined with the introduction of shell resource proxy variables: the proportion of annual variables, company size, ownership concentration, industry, outstanding shares of correction Olsen model, using the revised model checking resources value loss company stock price correlation determine a theoretical model for the empirical test of the next chapter. The fifth chapter is the empirical section of this article. In this paper, the 1999-2005 losses of listed companies as samples empirical test and reflect the value of the shell resources in the Olsen model based on proxy variables and control variables, using multiple linear regression equation to simulate. The empirical results show that there is a positive correlation between the book value and the stock price of the companies in which the losses, and can be seen from the proxy variables of ownership concentration, size, year of shell resources, resources value of the losses of the company's share price had a significant impact. It is due to the presence of the shell resources listed company even after consecutive losses will get \However, from the year dummy variable coefficients trend can be seen over time goes on, the resources value lower Issuance System of China's securities market continues to improve and continue to broaden financing channels for enterprises resources value continue to reduce. Chapter is part of the policy recommendations of this article, this chapter first described the function of the securities market resources to better use, but the shell resource consequences result in the securities market through price optimization of resource allocation function can not be achieved, and to solve this problem. The key is unreasonable to change resources value exists, it is necessary to change the stock issued approval system under government control. On this basis, the paper proposes policy recommendations: Issuance System in China's securities market should gradually from the approval system to a registration system. Fewer obstacles, and low cost companies listed under the registration system, equal access system lead to arbitrage on market equilibrium shell resources can not be brought excess returns, the losses of the company's stock price tends to normal, the stock market to optimize the allocation of resources through price functionality can be achieved. Thus, stock issuance system from the approval system to a registration system changes to eliminate from the fundamental function of the alienation of the capital market resources value exists, so that the securities market to the healthy development. Third, the main contribution of this paper. This paper attempts to explain the particularity of the losses listed company's share price with the point of view of the resources value, based on theoretical analysis of the factors affecting the resources value to identify the size of the company and ownership concentration The proportion of the outstanding shares of the major influencing factors, and as a proxy variable of the resources value, initially through empirical studies show that because of shell resources have a significant positive impact on the value of the losses listed company's share price. In addition, the analysis of the correlation between ownership concentration and the resources value, obtained different viewpoints previous researchers, that is because most of China's securities market share of non-tradable shares, the high concentration of ownership of Shell Resources more high. In this paper, according to company losses sustained the losses of the company is divided into three categories: the loss of the company for the first time, the second loss of the company, and three consecutive losses of the company. Loss of the company for the first time, the possibility of a turnaround three consecutive losses of the company, according to China's securities market system, the possibility of delisting greatly enhanced risk of such companies is quite high, investors will be based on the company's losses The continuity of the company's stock pricing.

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