Research and Analysis on Market Value Management in China Based on Method of Rank-Sum Ratio and Principal Component Analysis

Yaqian Pan, Wenxin Song and Yanjun Xv

International Journal of Economics and Finance, 2016, vol. 8, issue 11, 124

Abstract: Since 2005, China has implemented the split-share reform. After entering the full-circulation era of stock equity, the pursuit for maximize the company value has turned into the primary goal of listed companies in the course of their management and development. Thus, they attach great importance to the concept of market value management. The management of stockholders in listed companies began to pay attention to the inner values and the performances in the stock market of their enterprises, and thereby the concept of market value management is established. However, the weak efficiency of China¡¯s capital market has resulted in the deviation between market values and inner values of companies. Thus, companies need to implement market value management and devise corresponding solutions so that two kinds of values can be well-matched.This paper presents the definition of market value management at first. Next, it studies the background of the emergence of market value management as well as its development status in China, which are also compared with the overseas value management. And then, it makes a literature review and analyzes Economic Value Added Evaluation System (EVA), a performance evaluation system of market value management. It adopts the method of Rank Sum Ratio (RSR)and Principal Component Analysis to make empirical analyses,which evaluates the level of market value management of listed companies in China and discovers the weak links existing in the process of market value management .This paper eventually puts forward corresponding countermeasures and suggestions.

Date: 2016
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