NDLI: Selecting a better valuation model to measure bubble level of stocks price: empirical study from internet-based finance stocks in A-share market

Content Provider	Taylor & Francis Online
Author	Zhao, Yi Sun, Baiqing Xiao, Binqing Cheng, Fu
Abstract	As a star of emerging industries in China, internet-based finance has been developing rapidly. This paper, considers selecting a more suitable valuation model to measure the intrinsic value and price bubble of Internet-based Finance stocks. By comparing the relative valuation accuracy of the Kim et al. model with the Frankel-Lee model and the F-O model applied in the prior studies, this study finds that the Kim et al. model highlights the industry-specific features and outperforms other models in interpreting stocks price variation. Especially, under the circumstance of soaring and slumping stocks price variation (e.g. 2015), it is essential to study the price bubbles of internet-based finance stocks at different points of Shanghai Stock Exchange Composite Index. Surprisingly, our empirical results suggest that the internet-based finance stocks have negative bubbles at the whole average level, and about half of them are undervalued. Moreover, there are positive correlations between the bubble level and three key factors including the trading volume, the price to book ratio and whether to do cross-industry business on internet-based finance. These findings imply that the Kim et al. model contributes to improving valuation accuracy of internet-based finance stocks and explainability of the price bubbles in A-share market.
Starting Page	1619
Ending Page	1640
Page Count	22
File Format	PDF HTM / HTML
ISSN	1331677X 18489664
DOI	10.1080/1331677X.2018.1484787
Journal	Economic Research-Ekonomska Istraživanja
Volume Number	31
Issue Number	1
Language	English
Publisher	Routledge
Publisher Date	2018-11-13
Access Restriction	Open
Subject Keyword	Internet-based finance Intrinsic value Valuation model Bubble level G11 G1 M41 O16
Content Type	Text
Resource Type	Article
Subject	Economics and Econometrics

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