A Study On The Relationship Between Performance And Stock Prices Of Chinese Listed Companies

In recent years,stock market occupies a more and more important place in economy, therefore it is more urgent for us to study our current stock market and decide the future of stock market.Considered that the stock price is one of the most improtant factor in stock market, this paper select stock price,which usually influecnede by macro economy, company performance and inverstors behaviorls, to be the breakthrough point to start study. Hopefully, the results on whether company performance has relation with its stock price are significant to the theoretical research and practical applications.For empirical test of long-tern relationship between company performance and company stocks yield, this paper uses event study method,select sampel stocks which meet some certain standards from seven industriesn, divide stocks from the same industry into four teams according to their unexpected earnings,and calculate their accumulated abnormal return in every event windows. Results show that in our stock markets,unexpected earning of listed trims have notable positive correlation with accumulated abnormal return,which correspond to the existng papers.Further research indicated the following two conclusions. Firstly, cyclical stocks move ahead more obvioulsy than non-cyclical stocks. Because the sample stocks are selected from 2010-2012,when economy has been triggered by expansional fiscal and moentary policies, cyclical stocks have more investment value,which attract more capital. Secondly, in sample period, the stock yield of cyclical stocks has been less impacted by stock unexpected earning and thus cyclical stocks has more robust growth as a whole,which owe to a strong economic recovery.For theoretical analysis and empirical test of long-tern relationship between company performance and company stocks yield, our return model which builds on the real-options-based valuation model, finds out that changes in discount rates, profitability and growth opportunities have a significant effect on return for firms. Moreover, our model has stronger ability to explain the relationship between company performance and company stocks yield than the benckmark model.Further research indicated the following two conclusions.For cyclical stocks, investors place more importance on the profitability and capital invested.However, for non-cyclical stocks, investors place more importance on growth opportunities.There are two possible explanation for such results.Firstly, growth opportunities are more improtant to companies at growth stage,and capital invested is more improtant to companies at maturity stage. Secondly, for cyclical stocks, investors begin to focus more on changes in profitability, for cyclical stocks are more vulnerable to suffer from sever macro economic fluctuation which happens in 2008-2012.