Research On Low Performance Stocks Investment Value And Overshooting Problem

Stocks investment value has long been a core research direction of economists and financial economists.They have paid a lot of effort to explore the investment value of stocks, and have proposed various theories which enriched the content of finance.But because of the complexity and diversity in the stock market, there has not been a consistent conclusion yet now.In the actual operation of Chinese stock market.we find that the ST stocks performance well, even some ST stocks’ absolute price is higher then public companies’which is well-managed. Given this, Professor Li Lasheng propose that stocks investment value is composed of intrinsic value, market value and contingent valuation in the foundation of analysis the stocks investment value theories and credit being of monetary system and the actual operation of Chinese stock market. According to the pricing model, we choose the ST stocks as the samples and estimate their contingent valuation using Black--Scholes option pricing model, as well as the stocks investment value. Because the perpetrators’ chooses are inconsistent with the model assumes, there is overshooting and overreaction in the stocks market. So we explain the overshooting using the behavioral finance theories.The paper is composed of five parts. The first part is introduction stating the background and significance of topics, the situations of domestic and foreign researches and writing methods. The second part is low performance stocks investment value analysis, introducing the cash flow of equity and its limitations, as well as low performance stocks investment value and contingent valuation’s optional quality. The third part analyzes low performance stocks investment value using relevant models, which talks about the intrinsic value, market value and contingent value from the point of value composition. Besides that,this part provides economic explanation of ST stocks’investment value. The fourth part chooses 40 ST stocks as samples to carry out empirical study and discuss the overreaction of ST stocks combined with behavioral finance. The fifth part draws a conclusion and gives suggestions combined with the actual situation of our country’s stock market.