Empirical Research On The Relation Between The Performance Of The Listed Company And The Stock Price

There are so many influencing factors of the stock price in stock market, and the financial report is always the keystone in the analysis on stock price changes for its practicability and facilitation. The relationship between the performance of the listed company and the stock price is prominent positive relevant in Western stock market. But there are many problems in the Chinese market for the young age of the market, so it doesn't go without saying that the relationship is the same in Chinese market with the Western market.In this paper we test the relationship between the performance of the listed company and the stock price from long-term and short-term aspects based the review of the literature. We obtain the following results after empirical analysis: the VAR equation which is regressed by the performance of the listed company and the stock index has a high R~2 in the long-term equilibrium process. There is a cointegration between the ROE and the stock index. From these results we can see that the performance of the listed company and the stock price is not unattached, there is a relationship between them. In further study, we find that there is a prominent positive relevance between ROE and the stock price from VEC equation, while there is no such relationship between EPS and the stock price. In short-term the performance of the listed company does have a prominent influence on the stock price. There is an obviously positive change in the stock price when the earning information announced, but the positive relevance between the unexpected earning and the CAR is incomplete in further study. Besides we find the stock price moves ahead obviously in Chinese stock market. The CAR exists before the earning announcement, and it adds up to more than a half of the total number. The CAR is negative in the announcement period which confirms the above conclusion in another way.After the analysis of the empirical results, we consider that the financial report is been more and more regarded by the investors in Chinese stock market while the individual investors still exorbitantly speculate in the stock market. on the other hand, there are many faultiness in the information disclosure system, especially the advanced leaked out of the earning information before official announced which will provide the soil for the inside trading. Based on the above reasons, we give the following suggestions: Enhance the quality of the financial information, maintain the system of the stock market and the confidence of the investors; Improve the quality of the investors, avoid the exorbitant speculation; Perfect the information disclosure system, prevent the information leaked out ahead.