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Theory of value and its influencing factors analysis of listed companies

Author: LiLiXin From: www.yourpaper.net Posted: 2009-03-30 18:23:01 Read:
Abstract: In general, the stock pricing is based on the value of the company to assess based on the value of the company from the stock market has been the central topic of the market value of the company management objectives and valuation are two basic points of the company's value theory. the level of the value of the company by a variety of factors, its impact on stock prices of non-traditional single-determinism should be internal and external interaction theory in the economy is our country during the transition period, some special problems that affect the value of listed companies pending The low value of the company and influence the formation of value judgments and price.
Keywords: value of the company; valuation; influencing factors


A company's value theory Overview

In order to narrow the scope of the study, the company for the purpose of this article is limited to listed or to be listed CO., LTD.
As the goods on the capital market, the value of the universality of general merchandise and as the special nature of the capital goods, the value of the company should be reflected both the company's assets and long-term profitability, but also reflect the value of the market for the company's evaluation of an integrated reflect the value of a company from internal owners' equity and long-term profitability; from the outside as a commodity market equilibrium price that the stock price compared with the profit maximization goals of the neo-classical microeconomics, to maximize the value of the company as the company's goals is clearly to meet much more practical than the value of the company take into account both its stock of assets and incremental, also taking into account the time value of money and risk value, the more desirable it is taking into account the companies' respective interests goal is a multi-goal game balanced.
Company's value theory is the study of the various valuation methods and techniques to solve the problem of value assessments, including the company's various assets and the value of the company as a whole to make a reasonable valuation established from Miller and Modigliani two of Professor corporate tax, capital structure and firm value after the MM model, Western economists in this area in-depth study of the balance theory of the 1970s and 1980s, the introduction of asymmetric information theory has greatly expanded research vision; Sharp, etc. after the introduction of the concept of risk, the the famous CAPM model; others such as James Tobin's Q theory, Fischer Black and Myron Scholes option pricing model are enriched and developed the modern theory of value. more affect the valuation of three types: longitudinal discount model, horizontal simulation model and option valuation models, including the theoretical basis and method of calculation of the longitudinal discount model is more strict and mature.

Second, the value of listed companies factor analysis

Since a lot of factors that affect the value of the company, the limited space can not in this one by one analysis, so select a few representative influencing factors in China's stock market to start, focus on analysis of their impact on the value of listed companies, and evaluation the value of listed companies in China.
(A) Capital Structure and Corporate Value
Traditional Western theories of capital structure: the value of the company depends on the company's profitability, but also its cost of capital is directly related to, in an efficient market, the company maximize the value equal to its cost of capital is minimized; company's average cost of capital and directly related to the capital structure, the lowest capital structure of the average cost of funds in order to maximize the value of the Company to raise the ratio of capital and long-term liabilities, the company increased the risk, and thus the long-term cost of debt and cost of equity; But in the ratio is beginning to rise, due to financial leverage is not obvious, the rising cost of long-term liabilities slower increase in the cost of equity will not fully offset lower the cost of long-term liabilities brought costs down, so the average cost of funds at the beginning there will be a small pieces of down; lowest average cost of capital when the marginal cost of long-term liabilities and shareholders' equity is equal to the marginal cost, that is, in the best capital structure, the maximum value of the company at this time. modern capital structure theory with a set of theoretical breakthrough correlation and model of capital structure and firm value, the most prominent to the number of the aforementioned MM model two scholars believe that due to the presence of corporate taxes, interest payments and liabilities as required by the tax law in its corporate tax model tax deducted before payment of the dividend is deducted from the remaining profits after tax; obvious to raise debt capital than equity capital to be favorable, long-term debt because of the tax deductibility of the interest can reduce the average cost of capital, thereby increasing the company value means a theoretical maximum value of the company will increase with increasing their long-term liabilities.
Through analysis of listed companies in China 2005 Annual Report, the results showed that: First, the debt ratio of listed companies in China is relatively low, especially long-term liabilities, only about 40% lower than not only developing countries but also lower than in developed countries; Second, China's listed companies through equity financing to fund-raising, allotment and issuance is the main form of roughly accounted for about 70% of the amount of funding which Company management believes that the latter's capital costs are significantly lower than the former, it is contrary to common sense, the only explanation is that the management of listed companies ignore the shareholders' return requirements, so the cost of equity financing to be zero. This suggests that on the whole, China's listed companies failed to increase the value of the company up from the recapitalization its lower intrinsic value of the stock market the lack of an internal mechanism to adjust the capital structure of listed companies to increase its value.
(B) the ownership structure and corporate value
Ownership structure on firm value is mainly manifested in the behavior of shareholders on corporate performance. Stake or control determines the behavior of shareholders. First, ownership or control determines the influence of shareholders holding a smaller proportion or have weak is difficult management as an agent of influence. Secondly, determines the size of the shareholding proportion of the income distribution, a listed company after the exercise is Angufenhong again, ownership or control The decision of the shareholders' ability to act. personnel engaged in the management of listed companies, major investment and management decisions made, the release of company information no power to decide depending on the shareholding ratio or control. Finally, the stake decided to the shareholders exercise of the cost-benefit ratio. because the shareholders exercise is cost of the holdings of a large proportion of shareholders, the costs and benefits of a basic ratio, and even have excess returns, so the exercise is a highly positive , a great impact on corporate performance, and the minority shareholders to exercise, its costs and benefits are very asymmetric, might as well take the largest shareholder of "ride" is, but this gave the largest shareholder of "dominance" the expense of the other minority shareholders and the interests of listed companies.
From the actual situation of China's stock market, the shareholding structure of the main three categories: highly concentrated shareholding structure, uniform shareholding structure and moderately differentiated shareholding structure. The first decision undisturbed advantage. When the decision is correct, value of the company will significantly increase its drawbacks: major shareholders control the sources of information, resulting in very asymmetric; asymmetric information caused the stock price can not be timely reflection of the real and the true value of the Company, the management does not care about the growth of the value of the company; equity highly concentrated, impact on market liquidity, loss of external checks and balances of the market for the company's largest shareholder even threats and inducements operators with the collusion of loss of minority shareholders interests. most of our listed companies is such a case, now less advantage, now disadvantages multi-second class can be avoided and the behavior of shareholders in the first class extreme differentiation, and also avoid the selfish behavior of individual shareholders and with the management of collusion between shareholders to find a constraint mechanism. uniform holdings of shareholders to exercise the power of enthusiasm will inevitably suppressed, rational shareholders are not willing to pay more effort than others, so that we all want to take someone else's "ride" which requires new benefit-sharing mechanisms introduced in shareholders built incentive and restraint mechanisms, to avoid the irrational behavior of shareholders in the first two structure its level of shareholding, the shareholders decided to exercise the power level of effort, held appropriate shares gap, the shareholders are expected to reach a "moderately involved" with each other, in order to maximize the reduction of the efficiency loss of the principal - agent relationship, it is necessary that all shareholders can properly exercise their functions and powers, which require listed companies to arrange a good shareholding ratio, that is, the formation of the optimal ownership structure.
(C) the corporate governance structure and firm value
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