Research Of Influence Of Focus Media Backdoor HEDY Holding On Stock Price Based On The Event Study Methodology

In recent years, the valuation of China concept stocks in the U.S. stock market is getting lower.More and more takes shares in the privatization. As China’s stock market is booming n in 2015, an increasing number of enterprise want to list in the Chinese stock market.For them, backdoor listing is a very important way which costs lower and can be easier.The case of Focus Media backdoor HEDY holding listed is significant in Chinese stock market. The purpose of the paper is to analyze the influence of HEDY’s stock price after the backdoor.listing, with event study methodology.At first, We use CAPM model to simulate the normal rate of return. Then the actual income rate(AR) and the cumulative abnormal return are two indicators to measure price transaction due to this event. The ADF unit root stationarity test and the least squares regression equation are two empirical methods that used in the paper. We also constructed the statistic test of significance to test the significant inspection of CAR.The empirical results show that the fact of backdoor listing has a significant effect for the price of HEDY stock. It is concluded that there are three main reasons,the marketing hype, reasonable restructuring plan and the increased profitability. Put forward three investment advice for investors :rational investment borrow shell shares, focus on restructuring the company trend and get the timing.