Listed Company Valuation Model Of Innovation And Empirical Research

The valuation of listed companies is the most important and critical part of Securities Analysis.This valuation plays an important bridging effect in the securities market analysis from macroeconomic analysis, capital market analysis, industrial analysis and financial analysis to the investment strategy proposal. It is also the basic point for macroeconomic, industrial and financial analysis as all the work offers a basis for the company valuation so as to asiist investment decisions and determine strategic preferences.This thesis provides two multi-factor valuation modeling techniques through the respective analyses of basic (quantifiable) factors and corporate governance (un-quantifiable) factors that influence share valuation. Taking into account of several other determinants, such as corporate competitive environment, supplier or client bargaining power, and substitute threat etc, it then concludes with the New Law of One Price for share valuation and pricing. Although the Law of One Price has been established long time ago, it has many uncertain factors in practice which cause the law of one price being questioned in the trading area, for instance, each country or region always determine the commodity prices according to their own country or , region circumstances, or even impose some restrictions on the imported/exported goods or services in order to protect their own economic benefits and social stability, and to avoid the negative effects of the world financial shocks on home country economy. In addition, the commodity demands of each country or region differ as there are great differences in their economic development levels, industry development levels, household income levels, culture and historical conditions and social habits. Therefore, even for the same commodity it is hard to get to the same sales price so far in each country around the world.After all the financial products differ from the common commodities. As the barriers for the capital flows are relatively lower than the commodity flows, the integration of world financial market makes the pricing of the global financial products determined by their return and risk characteristics: not only the quality of different shares within one country or region differ from each other; and different share quality differ greatly in different country or region; but also factors like the lawregulation, economic development, technology improvement, industry prospect, stock market mechanism, investor structure do have different impacts among different countries, the final pricing of financial products will achieve the "One Price" through the investors' preference on risk and return.This article comes up with the multi-factor modeling techniques under the New Law of One Price analysis structure. Through the empirical analysis, the forecasting ability of this model for the share valuation has greatly improved when factors like corporate governance which cannot be measured quantitatively have been considered. It shows that the corporate governance structure has played a greater role in share valuation; investors have put more attention on the improvement of corporate governance structure and their investment concepts tend to be rational.For the security market in practice, valuation and pricing do not always accord and some errors do exist. Thus this thesis gives an in-depth discussion on the practical application effect of value investing strategies. Through the empirical analysis of Chinese stock market using Ohlson model, it reveals that the value strategies also have a very high annual excess return in Chinese stock market. However, in the current explanatory framework, this thesis discovers that the explanations of why the value investing strategy brings high excess yield in Chinese stock market either under the efficient market theory or irrational behavior theory do have some limits. Future research could be conducted by considering other relevant risk factors or investors' irrational behaviors.Finally, this thesis shows the weak Chinese stock market for recent years is ' actually an inner value regression process. In addition to the main factors of low earning capacity and operating efficiency, it attributes our low level of stock valuation to another key factor: that is our listed companies have serious imperfect corporate governance characteristics. According to the international practices, the value of any company with corporate governance problems should be discounted. Therefore, this article have put forward ways to improve the market operating quality and to reduce the risk premium in Chinese Stock Market from varied aspects, given as follows:(1) Strengthen the corporate governance mechanism for listed companies and improve their operating qualities;(2) Set higher entry criteria for new listings so as to enhance the overall quality of all listed companies by increasing the number of good quality companies;(3) Strengthen the market dropout mechanism and take a firm hand in...