The Analysis Of In Fluencing Factors On P/E Ratio Of GEM Companies

P/E (Price/Earnings) ratio is one of the most commonly used relative valuation indexes in investments. The P/E ratio level and its volatility in Growth enterprise market that was founded in2009has been systematically higher than those in mature markets, thus raising the question whether or not classical valuation theory functions in this market. With2009-2011data, this article analyzes the possible determinants of P/E ratio, both theoretically and empirically.According to DDM and Gordon Model, key determinants of P/E ratio include growth, risks, leverage and profitability. Later researches found out that company size, Construction and Industry could also change stock price and P/E ratio. This article uses panel data to test the significance of the factors discussed and investigated if the growth of Earnings per share growth rate is replaced by MB.