Valuation Theory And The Basic Analysis Of Empirical Research

Corporate valuation is generally referred to as equity valuation. The theories of corporate valuation is an important subject of study for both Corporate Finance and Market Finance in that it is the basis for investment decision-making as well as the implementation of value-based management. In terms of the theory development, however, Corporate Finance and Market Finance place different emphasis on their study. The former emphasizes the Corporation itself which means it focuses on the evaluation of the corporation while the later gives more attention on the market, studying the pricing of the corporation from the perspective of the market. The field of study in this dissertation belongs to the former, that is, the focus of research is placed on the evaluation theories of the corporation without considering the market pricing of the corporate equity. The research on corporate valuation has a relatively long history in western countries and it is still developing, moreover its models of application in practice are various. This dissertation attempts to make a systematic inspection of corporate valuation theories and discusses the latest development of corporate valuation.The research in this thesis can be classified into two parts. The first part concerns the analysis and discussion of corporate valuation theories and the second part is the empirical study of China's listed corporations.The first chapter is the introduction of this dissertation, analyzing the important role of corporate valuation in investment decision-making and value-based management. The second chapter expatiates on the a few fundamental theoretical problems which must be solved before proceeding to the study of corporate valuation theories. First, the relation between corporate valuation and the effective market hypothesis must be clarified. In the light of effective market hypothesis, the price of securities is the best estimating value of corporation. If this hypothesis is true, then the study of corporate valuation becomes meaningless. The analysis of this dissertation shows that it is not the truth; The second problem which has to be clarified is the relation between equity value and the intrinsic value of the corporation. The key issue is: what is the intrinsic value of a corporation? The analysis of this dissertation shows that only the equity value can represent the intrinsic value of the corporation; The thirdpoint deals with the role of the accounting data in corporate valuation. Because corporate valuation involves the prediction of the future activities of the corporation and the results of the future operation are subjected to various elements. As a result, the information required by the corporate valuation is not just the accounting data. The analysis of this dissertation shows that accounting data plays a key role in corporate valuation. On the one hand, accounting data "gives expression" to the corporate value and in the model of corporate valuation, the accounting data is the major variable which determines the corporation value, on the other hand, accounting data itself possesses quality properties in corporate value measurement.Chapter three and chapter four discuss and study exclusively the dividend discount valuation theory, cash flow discount valuation theory and option-pricing model used in valuation. The reason why dividend discount valuation theory is separated from the cash flow discount valuation for an exclusive discussion is because dividend discount valuation theory has a comparatively long history and there has been many diversified views on it. Moreover, dividends are related to the essence of stock, capital structure and other series of important theoretical problems concerning corporate valuation. There is no final conclusion as to whether dividends and corporate value are related. The key issue is the premise and hypothesis of related theories. There is less disagreement concerning cash flow discount theories and the main issues remains in the definition and estimation of cash flow. The option...