| The Market Value of the company is the sum of the market value of equity (Market Capitalization) and the market value of debt. Narrowly speaking, the company's Market Value is just referring to the equity market value. The mission of this paper is to discuss how to improve the Market Value of listed banks of China.Foreign studies show that the fundamental factor affecting the company's Market Value is the Intrinsic Value of the company. And the main factors could affect the company's intrinsic value include: Capital Structure, Corporate Governance, R & D Investment, the company's Business Strategy and Market Structure.Since the Intrinsic Value of the company is a fundamental element of the Market Value of the company, so how the company by improving its measurement of financial data to enhance the intrinsic value of the company is to become an important issue. Therefore, this paper spreads its further discussion on the angles of the company's financial data and the Market Value.In the process of analysing the relationship between company's financial data and the Market Value, we have selected Feltham_Ohlson Equity Valuation Model as a empirical analysis method. However, because the traditional Feltham_Ohlson model does not consider the growth of the equity value, the impact of capital structure on the equty, so it can not meet our research needs. Therefore, in accordance with Dang Jianzhong's (2004) research results, this paper will amend Feltham-Ohlson Equity Valuation Model. By adding the company's growth of profitability, profitability of core assets, capital structure, company size and the scale of floating equty into this model, this paper has established Feltham-Ohlson Equity Valuation Correction Model to complete the discusstion.In the first phase of the empirical analysis. We choose the China Minsheng Bank, China Merchants Bank, Shanghai Pudong Development Bank as the typical analysis. We select 06/30/ 2003– 12/31/2006 as the unified time, and we use SPSS statistical software to take regression analysis and comparison successively under Enter strategy and Stepwise strategy. Regression results show that "net profit year-on-year growth" and "net assets per share" keep a significantly positive correlation with "stock price".In the second phase of the empirical analysis. Taking into account the time of the first phase includes two phases: time before share reform and time after it, this will have a strong impact on the whole results. Therefore, in the second phase of the analysis, we choose the data of the three banks between 09/30/2005– 12/ 31/2006. This time we use SPSS statistical software in Stepwise strategy for a regression analysis and comparison. Regression results show that "net profit year-on-year growth rate", "net assets per share" and "percentage of shares in circulation" have a significantly positive correlation with "stock price". Combining two stages of the empirical analysis, the paper concluds: there are three major financial indicators have a positive impact on the current Market Value of Chinese listed banks. They are "net profit year-on-year growth rate", "net assets per share" and " proportion of circulating equty ". These three indicators can be further extended for three areas which a bank's business should take attention for, they are "bank profitability and growth", " capital strength of bank " and "good corporate governance structure." Therefore, in the the management of Market Value of listed banks, we should start with the general direction from the three major directiont, to enhance the intrinsic value of the banks. In the concrete implementation we should be noted the following points:1. Enhance the profitability of banks to improve Market ValueTo enhance the profitability of banks, is to mainly make financial innovation, so this will enhance the expected growth of the bank. These include: (1) system innovation in the mixed business trends; (2) products innovation connecting with the capital market; (3) the application of new technology for service innovation.2. Raise capital strength to increase the Market ValueBanks are enterprises running the risk, in today's financial activities there are plentiful diversification of financial risks, so the listed banks should strengthen their capital strength, raise their capital adequacy ratio, to enhanc the safety and operational stability. These include: (1) implement the new Basel Capital Accord actively; (2) establish an assets management system aimed at the core of the capital adequacy ratio; (3) to maintain a good capital structure.3. Improve the governance structure to enhance the Market Value of banksCorporate governance structure is the core value of the company, and a standardizing corporate governance structure will bring a higher investment premium. These include: (1) reasonable institutional investors and the introduction of foreign strategic investors; (2) the establishment of Market Value assessment mechanism and equity incentive mechanism; (3) attach importance to investor relations and investor relations management... |
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