Research On Share Price Recovery Capability About The Problem Companies

In recent years, there are a lot of critical incident emerged in quotedcorporations, such as, melamine contamination discovered in San LuCompany’s powered milk, the plasticizer found in jiu gui liquor,Foxconn’s staffs jumped from buildings and the banking industryoccurred cash shortage crisis. Once a company breaks out a crisis event,the sensitive investors will sell its stocks to avoid the loss instantly. Thiswill result in the share price of the company plummeted and the marketvalue sharply dropped. We defined these companies as ProblemCompanies. Because of these companies’ own strength and differentways to deal with crisis, when different companies encounter the samecrisis the ranges of the fall of their market capitalization and the speed ofreverting to the original lever of their share price have a very hugedifference. The range of the decline and the speed of the recovery are themarket value of repair capability about quoted companies, which is ourthesis researching. Because every company has its different share pricerecovery capability, in the follow-up period the Problem Companies willpresent a completely different situation——Some share price willcontinually slide, but others will rebound to their original lever. Why themarket value of repair capacity is different and how to improve it, whichbecome the focus of attention of the listed corporations when they facing the critical incident.This thesis is based on the market management theory and the publicrelations crisis theory, supported by the Correlation analysis and theRegression analysis. After theoretical research and empirical test, theauthor has found out the influencing factors about the share pricerecovery capability, including: the enterprise market scale、profitability、growth、the social image、ability of crisis public relations、the effect of themedia and the nature of the industry. This article ultimately put forwardssome constructive suggestions to improve the crisis public relationscapacity and optimize the internal structure of the company. Theseproposals contain that in the daily management enterprises need toexpand their scale, improve their profits and accelerate their developingpace; secondly, they should treat their customers as God regard credibilityand integrity as principle in order to establishing a good social image;thirdly, they ought to use crisis pubic relation strategy properly; moreover,they should reduce negative effect of the media and enhance positiveeffect of the media; last but not the least, they should broaden the widthof the product portfolio and increase product categories in a reasonableway.