Research on Performance and Valuation of Enterprises Placarded by Others Based on the Improved Panel Vector Auto-Regression Model

Abstract

In recent years, enterprises, which were placarded, have become a heated issue in the secondary market in China. However, there still lack researches about the performance and valuation of those enterprises which were placarded. Therefore, it seems that it is lack of persuasion to use the word “barbarians” to define the enterprises which carry out placard. For the reasons above, this paper makes the use of the improved PVAR model to give an empirical analysis on the performance and valuation of the enterprises placarded, based on the samples between 2011 and 2015. First, this paper divides the whole samples into two subsample groups by the dummy variable, according to the certain point of time whether the enterprise has been placarded. After that, it build two PVAR models combining the performance indicators and the valuation indicators. The results show that the sensitivity of the target enterprise’s performance is not as good as its valuation. Second, the two subsample groups are analyzed by the impulse response function. It explains that placard creates an incentive effect for the target enterprise in the short term. Third, by using the variance decomposition, this paper achieves a conclusion that placard reduces the dependence of the target enterprise on the aspects of its valuation, profitability, size and risk. Therefore, placard is a good signal for those target enterprises on the whole, which brings a nice momentum for the enterprises on the valuation, profitability, size and risk in the short term. In the long run, the enterprises will adjust to a stable state based on the short-term changes. From this point of view, “barbarians at the gate” bring the motivation rather than chaos.