The Positive Study On H Share Company Profit/Loss Information And Stock Price Changes

Efficiency of capital market is one of the core issues of financial market theory. On an effective stock market, all investors have equal access to information at the same time to make corresponding reasonable decisions. Therefore, no investors can make use of "related information" to advance any extraordinary gain. The so-called extraordinary gain represents the excess of "actual gain" over "normal gain" of stock investment that is subject to market factors and systematic risks in connected with such stock.In an efficient stock market, stock prices can sufficiently reflect all relevant information on a timely basis. Prior to the issue of listing companies' annual earning information, those investors who concern about operating results of the companies may profit from stock transactions when stock prices of the companies fluctuate with changes in their operating results. Following the issue of the companies' annual earning information, no investor is able to use the published earning information to advance any extraordinary gain from stocks traded at stable prices. Vice versa, stock prices can not sufficiently reflect all relevant information in an inefficient stock market. Therefore, prior to the issue of listing companies' annual earning information, the changes in stock prices of the companies basically have no connection with their operating results. Following the issue of the companies' annual earning information, investors can take use of the published earning information to advance extraordinary gains from stocks traded at volatile stock prices.Based on domestic and overseas research methods and achievements on capital market, this essay makes empirical analysis on the relationship between the earning information of H share listing companies and the changes in stock prices, and then makes a case analysis of the relationship between the earning information of Chongqing Iron & Steel Company Limited and its price changes.The event-study method is adopted in the essay for empirical analysis of the relationship between profit/loss information and stock price changes. The analysis process includes: event definitions, sample selection, calculation of normal yield, evaluation of extraordinary yield, data analysis and examination, and explanations to empirical results, etc. Sample selection and evaluation of extraordinary yield are the key in the process. Typically, extraordinary yield is derived from actual yield of samples less theoretical normal yield, and the market overall yield is directly taken as normal...