A Study Of Three Factors Affecting Return On Manufacturing Stocks

This study is aimed towards analyzing factors that affect return of investment in stocks. In particular, the study is carried out through a combination of theoretical and practical approaches. I try to study the relationships between different factors in order to help investors make effective decisions, and help listed companies design development strategies. The study is based on a wide range of domestic and international research and articles, and provides a summary that investor sentiments, company credit ratings, and economic added values are the three major factors in return of investment. The study has further carried out an indepth investigation of these factors in both theoretical and practical perspectives. To further study mechanisms of the three factors in investment return, I have chosen the 2009-2014 Shanghai stock index for manufacturing as an example. Firstly, an variance analysis is used to explore the relationship among enterprise characteristic, total assets and the stock return. Secondly, a correlation analysis and multivariate linear regression analysis is employed to discuss the intrinsic relationship between these factors and stock return. Finally, a VAR model is employed to test the delayed effect of these factors. The research results have shown that investor sentiment and company credit ratings have a positive effect on stock return, while economic value added does not have a significant effect on stock return. Furthermore, when a company’s total assets are less than 5 billion RMB, stock return can be increased by 0.021. VAR model analysis results have shown that these factors have a delayed effect on stock return. This study aims to help investors make rational decisions in investment strategies, provides some directional guidance to help develop strategies for listed companies, and provides helpful suggestions for developing a healthy and stable stock market in our stock markets.