2381/12084684.v2
Lijuan Ma
Lijuan
Ma
Marcel Ausloos
Marcel
Ausloos
Christophe Schinckus
Christophe
Schinckus
HL Felicia Chong
HL Felicia
Chong
Fundamental Analysis in China: An Empirical Study of the Relationship
between Financial Ratios and Stock Prices
University of Leicester
2020
q-fin.GN
China
Fundamental Analysis
Stock Prices
2020-04-08 16:31:03
Journal contribution
https://figshare.le.ac.uk/articles/journal_contribution/Fundamental_Analysis_in_China_An_Empirical_Study_of_the_Relationship_between_Financial_Ratios_and_Stock_Prices/12084684
The informational context is regularly questioned in a transitional economic
regime like the one implemented in China or Vietnam. This article investigates
this issue and the predictive power of fundamental analysis in such context and
more precisely in a Chinese context with an analysis of 3 different industries
(media, power, and steel). Through 3 different kinds of correlation, we examine
25 financial determinants for 60 Chinese listed companies between 2011 and
2015. Our results show that fundamental analysis can effectively be used as an
investment tool in transitional economic context. Contrasting with the EMH for
which the accounting information is instantaneously integrated into the
financial information (stock prices), our study suggests that these two levels
of information are not synchronized in China opening therefore a door for a
fundamental analysis based prediction. Furthermore, our results also indicate
that accounting information illustrates quite well the economic reality since
financial reports in each industry can disclose a part of stock value
information in line with the economic situation of the industry under
consideration.