Do Factors Implied in Dividend Discount Models Really Affect Price-Earnings Ratios in Chinese Stock Market

DOI

10.2991/isbcd-17.2017.29How to use a DOI?

Keywords

P/E ratios, dividend payout ratios, Beta coefficient, earnings growth rates, non-recurring items

Abstract

Price-Earnings ratio (P/E ratio) is frequently utilized to evaluate a stock. Determining what factors have influences on P/E ratios is beneficial to better interpretation and prediction of this ratio in practice. Historically, though some academic studies on this topic have identified some factors in terms of both microeconomics and macroeconomics, many of them were conducted in developed financial markets decades ago. This article proceeds with a combination of well-developed theoretical foundation and empirical studies in emerging market using latest data. It begins with traditional value theories and identifies three potential factors: dividend payout ratios, earnings growth rates and Beta coefficient. Then updated data from Chinese stock market are collected and analyzed to further find out the relationship. Behavior patterns of these three factors are also examined to check if there exists certain degree of persistence over time. When coping with earnings growth rates, we take non-recurring items into consideration. In the last and the most important part, regression analysis is carried out to give insights on the magnitude of significance of the relationship.

Copyright

© 2017, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Jingying Zhou
PY  - 2017/10
DA  - 2017/10
TI  - Do Factors Implied in Dividend Discount Models Really Affect Price-Earnings Ratios in Chinese Stock Market
BT  - Proceedings of the 2nd International Symposium on Business Corporation and Development in South-East and South Asia under B&R Initiative (ISBCD 2017)
PB  - Atlantis Press
SP  - 142
EP  - 147
SN  - 2352-5428
UR  - https://doi.org/10.2991/isbcd-17.2017.29
DO  - 10.2991/isbcd-17.2017.29
ID  - Zhou2017/10
ER  -