Study On The Correlation Between Stock Price And Financial Indicators

There has beena lot of research literature on this aspect since 1968 when western academia proved the correlation between accounting earnings and stock prices.As we all know,there are many factors that affect the stock price.Based on the consensus that value determines price,financial information as a manifestation of the listed company's operating conditions and intrinsic value,its impact on the stock price is basic and understandable.Moreover,the gradual improvement of the financial disclosure system and the improvement of data storage and processing capabilities have provided favorable conditions for us to reveal the correlation between financial indicators and stock prices.According to the Ohlson series theory,there is a linear relationship between the dynamic information of listed companies' financial indicators and stock prices,and in order to analyze the correlation between financial indicators and stock prices more comprehensively,this paper expands the Ohlson model.Select 12 financial indicators that reflect the asset size and profitability of listed companies,shareholders'profitability,debt repayment ability and development capacity,and perform correlation tests with the average closing price of shares in the second quarter,and adopt the full subset regression method.According to the adjusted R2 and Mallows Cp statistics,the optimal multiple regression model was determined.In order to avoid mutual interference between different industries,only listed companies in the real estate industry are the subjects of research,and empirical analysis is based on real financial data of real estate industry in each quarter and year of 2015-2017.In the research,we found that there are large gaps in the total assets of listed companies and the total assets scale is different by three orders of magnitude.Therefore,in order to obtain more accurate research conclusions,after performing regression analysis on the entire sample,the data is further divided according to the total asset size.The three levels of higher recognition are used to perform correlation tests on the samples belonging to each asset size.The conclusions are as follows:(1)For listed cormanies in the real estate industry,there is a significant correlation between stock prices and financial indicators.The correlation coefficient between net assets per share,earnings per share and stock price is positive,and the correlation coefficient between current ratio and stock price is negative.Earnings per share have the greatest impact on stock prices.(2)For real estate companies with different total asset sizes,the financial factors affecting their stock price are quite different:the correlation between stock prices and financial indicators that reflect shareholders' profitability is significantly positive.The financial indicators that reflect the scale of the assets only have a linear positive correlation with stock price for companies with larger total assets.(3)For real estate companies with different total asset sizes,the larger the total asset size,the stronger the correlation between stock prices and financial indicators,and the better the fitting effect.For companies with a small asset size,the correlation between the stock price and financial indicators is weaker.There are three implications for the study.First of all,to be able to enrich the capital market theory,provide theoretical support for the majority of investors,and secondly,it can restore investor confidence in the stock market and help spreading value investment idea.In addition,it can provide more comprehensive and more targeted considerations for the regulatory authorities to improve the financial disclosure system and regulatory system of listed companies.