Intangiable asset valuation's impact on Chinese stock market

Abstract

Since the appearance of goodwill in China as an independent accounting subject in 2007, the goodwill of listed companies has become a higher proportion of the company's assets. As an intangible asset, excessive goodwill can lead to a lack of objectivity in the estimation of corporate assets and meanwhile, it will affect investor's judgment. To examine the relationship between goodwill and the Chinese company's stock price this paper uses Ohlson residual income valuation model as a basis to do the research. This paper selects the companies on CSMAR as objects and collects their data between 2012 to 2016. The empiric results prove that goodwill of listed companies in China has a significant positive correlation with the stock price. Based on the results of this research this paper will explain the meaningfulness of this study combined with China's national condition.