The Empirical Study About The Firm Growth And Investment Excess Return Of China Listed Company

This paper firstly point out the background to the study. And understand the theoretical basis of this study and empirical support through literature review, including the efficient market hypothesis, pricing theory and investment theory. And then review the definition of the company growth, the investing excess return, and the financial index, on which the paper depends, and the heated debate among the three on both of the theory and demonstration. Based on the literature review and the realistic, the paper put forward the research purpose, which are analysis of the company's growth and investment excess returns are whether significantly related or not, exploring the salient features of the different growth companies, and ultimately trying to provide effective decision-making recommendations to the investors. In this paper, using empirical method, select two sample for research separately,2004-2009 data for the Main Board market and 2007-2009 data for the Medium and Small Market. Importantly, the latter carried out a detailed in-depth analysis. The empirical results show that there are significant positive correlation between the excess return and the growth. Specifically, investment excess return has no significant relationship with the company's history of the company, but has significant relationship with the current and the future growth. Importantly, the Medium and Small companies'growth has the stronger explanatory to the excess return. Based on the above findings, the empirical results of the paper-depth study of Medium and Small plate samples, revealed that there are significant difference of the profitability, share index, the valuation indicators for the different growth, and high-growth companies tend to have higher earnings capacity. However, compared with the historical documents, this study did not find that different growth enterprises in the capital structure, solvency, firm size, operating capacity and cash flow, etc. show significant differences. The empirical results further suggested that investors should focus on strong corporate profitability, because they tend to have higher growth. And high profitability growth companies will have higher excess returns. When selecting high-growth enterprises, we should avoid to the companies which have the high book value, sales ratio, Tobin Q value, and the retained earnings per share, lest can't get the higher excess return.