A Study On The Relationship Between Price Fluctuation And Corporate Performance In Bear Market

With development of nearly 30 years, the Chinese stock market has begun to take shape. While compared with the foreign mature stock market, one significant feature of Chinese stock market is that the stock price fluctuates significantly and frequently. Meanwhile, volatility of the stock market plays an important role in people’s financial situations as well as the healthy operation of national economy. Therefore, the stock price fluctuation influence factor attracts the attention of the academic researchers and many investors. From April 16th 2003 to June 30th 2005 and July 6th 2009 to December 4th 2012, the period of A share downturn, Shanghai composite index dropped from 1725.71 to 1132.15 with the range of daily fluctuations of stock prices reached 34.4% and from 3128 to 1949 with the range of daily fluctuations of stock prices reached 37.68%. However, under the background of the bear market, some industries are struggling against the flow, such as biological medicine industries, food and beverage industries, especially some top enterprises, whose stock prices grow rapidly. Even though it could be profitable for investors to buy these stocks, it is still an tough work to pick the stocks. Thus, researching the reasons behind the stocks of some industries would give us some thoughts about the stock prices.Stock price fluctuations are restricted by various factors. First of all, the securities market is an important part of the macro economic operation, thus the operation of the stock market is restricted by the macro economic. The situation of the macro economic affects the performance of the stock market, and the performance of the stock market could also reflects one country’s macroeconomic indirectly. Secondly, the policy factors, such as the trade policy, legal system, fiscal policy and monetary policy, are also matters for the operation of the securities market. For example, the trade policy, legal system, fiscal policy and monetary policy. The interest rate, which determines the quantity of capital flowing into the market, directly affect the volatility of stock prices. Besides, the intrinsic value of the listed company is also one important factor. For instance, the industry’s prospects, the company’s financial situation, profitability, management level as well as merger and acquisition of behavior. In our stock market, in fact, the correlation degree between the market and institutional arrangement is high. Is there any excess return of shares of listed companies can be explained by the company’s performance? This paper aims to find the internal factors for the stock price fluctuations.As in the same economic operation period, the macro factors are essentially the same, so this paper is mainly analyzing the differences between the company themselves, especially the performance of listed companies. We could get the indicators from the annual, quarterly financial statements, while the factors we analyzed in this paper mainly including the listed companies’operating revenue growth rate, net profit growth rate, net interest rate of the asset-liability ratio, total assets, net cash flow growth, sales, gross margin, which could on behalf of the companies’growth factors.Therefore, the target enterprises of this essay are choosing from the companies whose prices are significantly different from the market index from 2003 to 2005 and from 2009 to 2012. The financial data samples are picked from the first quarter of 2003 to the first quarter of 2005 and the second quarter of 2009 to the third quarter of 2012. Though analyze the data to make sure the main financial indicators affecting the stock price, and find out how the industry information and financial information affect on stock price. In order to further verify whether the industry as a whole is associated with the company’s operating performance, we selected the Chinese medicine industry, food and beverage industry under the big bear market in 2015 to analyze. This paper analyzes the reasons of the price risen by using statistical methods and econometric methods, and here are the main content and the structure:First part is introduction. Talking about the selected paper’s background, meaning of the research, research methods and framework as well as pros and cons of this paper.Second part mainly elaborates the present situation, the research achievements and relevant theoretical basis of the domestic and foreign researches.Third part is to introduce the financial index system of performance evaluation of listing Corporation.Fourth part is to introduce the development of the 12 companies which performed well under the bear market from the year 2003 to 2005 and the year 2009 to 2012.Fifth part is the core content of this article. Mainly including the empirical analysis of stock price volatility and corporate operating performance of the 12 chosen companies. Meanwhile, the stock price volatility and corporate operating performance in the fields of Chinese medicine industry, food and beverage industry biological medicine industry in the year of 2005, including the selection of sample interval, data collection and regression model, subsequently get the relevant factors that affect stock price volatility of listed companies.Final part of the paper is the research conclusion and policy recommendations. This part is a summary of this paper, which draws the main conclusion.Firstly, in the A-stock market, the risen stock price was significant with the achievement of public companies and their financial situations. Under the background of the bear market, the risen stock price is closely related to the good financial situations, especially the dramatically growth of the revenue and profit.Secondly, we could not make a conclusion whether the whole industry performs well only through several company’s performance.Similarly, it’s hard for us to say which industry has most well-performed companies. As the stock price changes frequently, which can be influenced by many factors, and could not be explained only through the operating performance.Lastly, the stock price fluctuation is associated with the business performance of listed companies, which means the volatility of the share price reflects the company’s performance effectively. In other words, the A-share market is efficient, and could provide theoretical basis to study the behavior of investors and to make policies for regulators.