The Research About Mining Investment Effect Of None-Mining Listed Companies

Mining industry investment has higher risks than the other kinds of investment and its profits are un-certain. Chinese securities market appears lots of non-mining companies which invested in mining industry recently. At the same time, this kind of investment method is very popular among investors.So this thesis researched on the market reaction to the investment to the mining industry by the non-mining companies and the main factors that affect the market reaction.This thesis selected33non-mining companies as the research samples from Shanghai and Shenzhen through2008and2011. Based on the effective assume of the capital market and make use of the event study method to research the market reaction towards the mining investment announcement. The results of the research show that the market has the significant reaction by the investment announcement and the reaction is positive. Then the thesis takes a further explanation to the market reaction. Regarding the Tobin’s Q as the Substitution variable of the mining investment and refers to the other thesis about the market reactions. The thesis introduced the possible factors that mayaffected the market by the method of multiple linear regression. The result of the research shows that market reaction and the company’s investment opportunities have some significant negative correlations. The thesis argues that the possible reason is that the investment opportunities of the listed companies are much higher, and the market hesitated about the high Tobin’s Q. Some other results of the research show that the market reaction and the free cash flow are significant negative correlation. But the market reaction and the payout ratio are significant positively related. This two results verified the hypothesis of free cash flow. At the same time, the result also found that market reaction is significant negative related with the size of the company. At last, the thesis gave the appropriate suggestions to the companies, investors and the supervision department.