System Construction And Empirical Research On The Valuation Of Corporate Growth

Enterprises have made a significant contribution to our economic construction as thecells of the national economy. So, enterprises are strong force for promoting the rapideconomic development of China. With the continuous improvement of our capitalmarket’s effectiveness, the prospect of the enterprise has a direct impact on the continueddevelopment and prosperity of our financial markets. Growth, as an important indicatorfor measuring the prospects of enterprises, get more and more attention of investors andthe Government, who make the right decisions largely based on the growth.First, the paper reviews the Theory of the Growth and influencing factors at homeand abroad. Second, this paper describes the concept of growth and the method of growthevaluation combined with the theory of industry lifecycle and analyses the driving factorsof the various stages. Third, on the basis of the existing theoretical results, the paperestablishes growth evaluation index system according to core competence, thegovernance, operation level and external environment from the inside out. Corecompetency is the combination of various skills and knowledge in the enterprise,reflecting the potential development in future, which is the source and foundation ofgrowth. Operating level mainly refers to the owned operating results, reflecting theoperating efficiency of the production activities in the past and current performance levelin the company. Governance associates core competency with operating level. Thepurpose is protecting the interests of investors and enabling the company to use financialleverage effectively. External environment is the industry background, which shows theoverall profitability in the industry. Finally, selecting23high-tech enterprises in China asan example, case studies for validating the evaluation model of growth based on thecatastrophe progression method. In this paper, the validity of the growth evaluation indexsystem is empirically tested, and results showed it is effective and reasonable.This paper uses the following research methods. First, it is normative analysis. Thepaper sums up the effect of industry life cycle on growth and analysis the driving forcesin different stages of industry life cycle systematically, which provides foundation forconstructing the growth evaluation index system based on the corporate growth theoryand industry life cycle theory. Second, it is positive analysis. The paper selects thehigh-tech listed companies in China as a sample to analysis whether thereis significantly different between the growth evaluation index system, the growth rate ofmain business revenue and Tobin Q value. The aim is to verify the validity andreasonableness of the system. The innovation of this paper is mainly manifested in three aspects. First, after thedomestic and foreign research review, enterprise growth theory of China isn’t to be asystem for one-sidedness in study. And there are significant differences in research as aresult of different samples. Second, the paper determines the relative importance ofgrowth indicators based on analyzing the driving factors of each industry life cycle stage,which reflects the influence of industry conditions on growth. Third, this paper buildgrowth evaluation model to assess growth reasonably from the four aspects of corecapabilities, governance, operation level and external environment.