LST Model's Explanation Of Closed-end Funds Discounts In China

Although the discount of closed-end funds is not a special phenomenon in China, it has already impacted on market normal performance a lot. This paper is aimed at studying the explanatory ability of LST model on Chinese closed-end funds and analyzing the unique factors which influent the discounts in China. This paper has selected twenty funds and 1260 A -stocks from year 2004 to year 2005 as samples, applied descriptive statistic analysis, corresponding analysis and linear regression through SPSS. The result of the empirical test is LST model cannot explain the phenomenon of closed-end funds discount, which means the stochastic investor sentiment is not the main reason but other more sophisticated ones behind the phenomenon. According to the result of the empirical test, the government should put emphasis on regulation system not the investor's behavior.