A TFP-Based Analysis On Corporation Valuation

The overall quality and the value of listed companies have a direct relationship to the their attraction and competition, and are the key to healthy, stable, and sustainable development in the market. Valuation of the securities of listed companies is the most important and crucial step in the security analysis. This is absolutely not a simple summation of the assets assessment, but the process of judging and estimating the persistent management value regarding the company and its internal business units and branch organization as a whole. Furthermore it is the process of scientific quantifying the future operating level of the company.The traditional theories and methods estimating the value of the company are estimating the company's key financial indicators as well as forecasting the financial report forms, which mainly are business revenue growth rate and cash flow of the company. However, this is only an aspect of the company value and can not completely reflect the actual value. The paper combined the theory with empirical analysis and established the assessment model based on the value of total factor productivity (TFP) by carefully analyzing of Chinese listed companies and research valuation status quo. We focused on the average annual share price model and explained the relationship between total factor productivity and the company's value, which made the indirect comparison of the value of the companies possible. Then we made the empirical analysis of Chinese Petroleum and Chemical Industry the listed companies.The article used the DEA method to calculate the total factor productivity index which could help avoiding macro-economic impact effectively. The TFP index reflected the operating ability of the company, which mainly including profitability and development capacity, and so on. In this paper, the current model not only showed that the total factor productivity index had a relatively high weight in the company valuation model, but also that one period lag of the TFP index had a positive and great impact of the value of the company. The conclusions proved that the company ability theory that the company itself was the accumulation of the various resources and capabilities as well as the result of constant innovation and development. At the same time, various of statistical indexes in the empirical testing of the model showed strong statistical significance. We drew the conclusion that the valuation model could be an objective assessment of the value of the company and better serve the market transactions and investment decision-making.