The Correlation Analysis Between The Price Of Listed Companies’ Stock And Financial Indicators

A prominent feature of the stock market is the price fluctuations. There are manyfactors that influence the stock price, and the financial indicator of the listed companiesis the most important one. Many scholars at home and abroad conducted a lot ofempirical researches on the abstruse relationship between the listed company financialdata and the stock price, which are instructive in the actual securities investment.However, overseas researches mainly focus on the mature securities market instead ofthe emerging markets, and domestic researches ignore the change of the macroeconomicstructure in China.Do the correlation between financial data and stock price will be changed overtime in the immature stock market in China? Do the effect of financial indicators are thesame in the different industries? Do the consistencies of financial performance in listedcompanies will affect stock returns? Through the research on these questions, we canpredict stock market future trend to help investors make better decisions.Starting from the above questions, this thesis chooses220listed companies from22industries between2007and2012in securities market as the sample and analysesthe relationship between financial data and the stock prices. This thesis is divided intosix parts: The first part, the preface, introduces the research backgrounds well as thepurpose and the significance of the researches, and briefly explains the methods and theinnovation of thesis; The second part is the literature review, including literatures athome and abroad; The third part introduces the related theories, including the factorsimpacting the stock price, effective marketing theory and the mechanism of financialindicators acting on the stock market and stock pricing model; The forth part isempirical assumption and design, including the empirical assumptions, the sampleselection and data sources, definition and analysis of the variables and the descriptivestatistics of the variables. The empirical assumptions help us to find thebetter-performing stock by observing the trend of industrial upgrading and consistenciesof financial performance; The fifth part is the empirical analysis which includes overallsample demonstration, the industry sample demonstration, the relationship betweenconsistency of financial performance and stock return of listed companiesdemonstration; The sixth part is the conclusion and suggestion.This paper draws following conclusions through the empirical study: earnings per share, Tobin Q and net assets per share have positive influences on stock price in theoverall sample; financial indicators have different impacts on the emerging highconsumption industry and the traditional heavy chemical industry, While the otherconditions remain the same, the earnings per share has the bigger impact on theemerging high consumption industry than the traditional heavy chemical industry, thenet assets per share has the greater impact on the traditional heavy chemical industrythan the emerging high consumption industry; Our results reveal that there is asignificant positive relationship between consistency of financial performance and stockreturns among low growth firms, while the relationship among high growth firms is notsignificant.The author puts forward the following investment advice to investors: investorsshould focus on the emerging high consumption industry when choosing the stock;investors should choose the listed corporations which have the good prospects ofdevelopment from the emerging high consumption industry, or the corporations thathave high asset per share to resist risk from the traditional heavy chemical industry;investor should find investment target from the listed company whose financialindicators stay stable and remain low growth rate.