A Study On The Valuation Of Listed Banks

The validity of price is the core issue of resource distribution, capital market is important to economy, so the validity of capital market is the core issue in finance field. Fama's Efficient Market Hypothesis emphasizes on information efficient in capital market. The level of efficiency has close relationship with the rationality of asset pricing. In efficient market, corporate value solely rests on investment decision and operating cash flow. But it is well-known that the capital market of china has little or nothing efficiency, so what decide the stocks'price, is it the value of the company?Compared with Common Corporation, commercial bank has explicit particularities. Commercial bank is some kind of risk-operating enterprise, which has high of debt ratio and operates currency of imperfect competition. The value of commercial bank has more to do with the management and control of risk. Furthermore, commercial banks have special value, because they play very important role in social economy.Nowadays, four main valuation methods: Asset Valuation, Comparison Valuation, DCF Method and Option Method are widely applied in the areas of corporate investment, financing, value Management, achievement valuation and strategy-making.Because of the specialty of the commercial banks'operation and asset, using the method Asset Valuation to valuate the valuation of the banks will lead to inaccuracy; Comparison Valuation can't be a good method under the circumstance which there is little sample corporations and too much interruption in the capital market; so far the best method is the DCF Method in despite of it also has some limitation. The Option Method just can be use under some special Situation such as bankruptcy.The first part of this paper is introduce, which gives forth to the research issue, discusses the research target, and presents the research path and methods. The second part is the literature review of company valuation. It reviews the evolutionary course of the valuation theories, and explains in detail the four main evaluation methods including Asset Valuation, Comparison Valuation, and DCF Method.On the base of the listed bank characteristics and operation mechanism. This paper will choose the China Merchants Bank as the object to analyze the value of the bank by the DCF Method, then compare the result to the average price during the same time to appraise this method whether or not fit the situation in capital market.