Do Chinese Investors Underact to Goodwill

35 Pages Posted: 19 May 2021

See all articles by Yongqing Li

Yongqing Li

Quanzhou Normal University - Tan Siu Lin Business School

Date Written: March 17, 2021

Abstract

This paper mainly studies goodwill as an intangible asset, and considers that goodwill and sales contain information about enterprise value. The results show that goodwill can predict the future return rate of China's stock market, indicating that investors in China’s stock market underact to information contained in goodwill. In addition, this paper also finds that the organizational structure of the company not only affects the merger behavior of the company, but also affects the predictability of the company's future stock returns. Specifically, in China, goodwill can only predict the future stock returns of non-state-owned enterprises, but not the future stock returns of state-owned enterprises. The difference is not due to the size of the company.

Keywords: Goodwill, Cross-sectional Stock Return Predictability, China’s Market, State-owned Enterprises

JEL Classification: G12, G14, G32, G34

Suggested Citation

Li, Yongqing, Do Chinese Investors Underact to Goodwill (March 17, 2021). Available at SSRN: https://ssrn.com/abstract=3847088 or http://dx.doi.org/10.2139/ssrn.3847088

Yongqing Li (Contact Author)

Quanzhou Normal University - Tan Siu Lin Business School ( email )

China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
56
Abstract Views
406
Rank
542,979
PlumX Metrics