The Rationality Of P/B Model Applied In Pricing Foerign M&A Of Listed Compannies

This paper aims to study how to determine the evaluation of target enterprise value with a reasonable financial index system, how to use the P/B modle to determine the evaluation of target enterprise, and study the rationality of this methord.Through the case study, this paper chose the pharmaceutical industry who had the most merger case in 2004 as the research object, 69 listed companies as the research samples, 5 target enterprise as the study case. The use of factor analysis method is to reduce the dimension and find the common factor. The use of hierarchical clustering of 69 samples is to find the optimum packet of target enterprise.Using the packet'average P/B to book the target enterprise value.The empirical results show that, the P/B modle is able to evaluation of five cases. The P/B modle and are both able to make a reasonable estimate of next three years'short-term enterprise value.stock price and the book value of 5 cases are able to assess the price, the market is effective. But in contrast, the meam of 20 trading days'closing price is more efficient to assess the value in the next three years. The market is effective. Market is more accurate.