Analysis And Correction Of Market Value Management Objectives Of China Listed Companies

The scope of market value and way of management is a big issue for the fields as security analysis and investment banking. The concept of value management has been springing up and becoming headlines as its initiative.With the road of listed companies management, profession and information dissymmetry lead to cost of entrust and act.Shareholders favour the ability of sustainable development of companies ,while managers focus on the performance in his office. Also, China's security market is a weak-form efficient and costly in information accumulation and processing. The objective based on market value management may relieve the problems above effectively. It makes entrustors and actors united to the largest extent and reduces moral risks. Meanwhile, market value management regards more on investor relationship management (IRM), one of which major concern are information transparency and MV and RV narrowing.It is necessary for listed companies to set management objective based on MV. Firstly ,MV is a certain choice not only for time development but capital market consummating as well. The capital market in China is on the way of pefection, and there is a large gap between MV and RV. With narrowing the gap by MV management, the market efficiency can be enhanced. Secondly,it is an inevitable choice for PM with MVM. The MV of listed companies refelects PM's compentency and achievements in the companies and MV is also necessary assurance of PM's vitality. Finally, MVM is a certain choice for listed companies because it is an important measure in acquisition and negative-acqusition. Good performance in MV is favored to lower its financing cost, meantime, MV reflects the capacity of direct financing and exposes influences over companies'future.However, MVP—based objective has some problems and erroneous zone. Above all, the objective may result in the impulse of partially pursuing large weight MV. Also, the weak-form efficient tranmission system causes difficulty in MVM. Entire circulation is a vitally important reform in our capital market and it creates and improves fundamental functions for the market. But the market is still in weak-form efficient state for its imperfection. Therefore, instinctive value can not be reflected on the changing of MV over time, which increases time lag and instability of MVM. Finally, the objective is lack of comprehensive inspection indexes, which leads to hardly limiting the occurrence of seeking for MV in short run.On the basis of above, the article raise the concept of MVM, a strategic management system ,which is based of PM's management with conforming with the stipulation and effectiveness, oriented towards value creation, and motivated by shareholder's rights drive, handled by IRM, and centered by long-term MV maximum in proper way.The article illustrates the objective of MVM in two aspects.1. The Creation of ValueListed companies should bear the idle of sustainable development to level company value with proper, conforming with the stipulation , legitimate and scientific management, and finalize the creation of value. The implications of money capital in company management was universally concerned in the former papers. However, the article examines the path of value creation on capital cost focus. Firstly, the Superiority of Capital Structure. With the lowering of cost from higher debt rate, WACC increasingly lowers. But the earning from cheaper-cost debt is counter-balanced with that from higher debt rate, WACC reaches minimum, which is the optimal capital cost dot. Listed companies are in seek of the dot, as lower capital cost in order to reach MV maximum. Secondly, the enhancement capital operation. By penetration and influence among management of operation ,human resources and production, it will raise capital operation efficiency. From the profit allocation aspect, it can rid of malpractice from information transmission in weak-form efficient market and it can make use of shareholder's rights drive to reduce the cost of entrust and act and realize the maximum.2. The Realization of Value.Through effective IRM, it will raise the market transparency, make company's MV restrain to IV, and ultimately arrive at the objective—maximum of value creation and optimum of value realization. When it reaches balanced development between value creation and realization, MV premium become the other layer of MVM. MV premium includes premium of company management, business clearance, and asset preferences, MAR, transparent Information disclosure and excellent investor relationship and product brand etc. It will raise MV premium by promoting IV, enhancing IRM and completing information disclosure system.Based upon theoretical analysis, the article collects data from all companies listed in Shanghai and Shenzhen stock exchange in 2007, so as to make multiple linear regression with 337 relevant samples. In empirical analysis, the article makes a definition of MV increasing unit, which refers to how much(stock price) one unit share can gain in a year. The equilibrium relation is the stock price at the end of the year minus the price at the beginning of the year. Owing to MV does not abide in the "larger is better" principle, as a dependent variable, the introduction of MVIU may not only eliminate the impact of share scope on analysis, but also dynamically analyze the factors that influence MV from increasing number. Set MVIU as dependent variable, assume the model as, MVIU=B1×Net asset per share +B2×Cash flow of per share+B3×ROE+B4×Shares of the largest shareholder+B5×Revenue growth of main business. Finally concluded: MVIU=2.7101×Net asset per share +0.6038×Cash flow of per share+ 0.0766×Shares of the largest shareholder +0.0417×Revenue growth of main business -0.8026Conclusion 1 The growth of net asset per share drives the growth of MV.Conclusion 2 MV will increase when cash flow of per share increases influenced by the expectation.Conclusion 3 The higher ROE is,the more MV increases.Conclusion 4 Shares of the largest shareholder impact on MVIU. At this stage in our country,the bigger Shares of the largest shareholder is, the more premium will be brought.Conclusion5 Revenue growth of main business increases. MV increases, too.The conclusion above indicated that the factors which influence intrinsic value of listed companies is also influence its MV. Despite several short-term behavior may temporarily affect MV of listed companies, but in the long run. the Principle of Value remains effective in present stage of China's stock market.In the end, the article draws the revised objective of MVM:1. Centered by balanced development between value creation and value realization.2. Measured by close connection between intrinsic value and market value.3. Oriented by development of listed companies.4. Evaluated by proper maximum of MV.