Performance Study on China’s ST Companies——Based on Factor Analysis Combined with Contribution Rate of Variance

Sen Wang, Qi Wang

Abstract


The listed companies will be specially treated when their business performance is bad or there are serious
accidents, which is a rule to reveal the investment risk of stock market. So it is very important to study the
performance of listed companies under special treatment (ST companies) for the development of stock market in
China. We choose 50 companies as the samples in the ST plate of 2006 in accordance with the industry
categories and scale, and use Factor Analysis to study the integrated performance of the sample companies
during 2005-2007. Our research conclusion shows that (1) the integrated performance of companies is the
fundamental factor to determine whether it will be specially treated or not. (2) The performance of ST companies
in china during 2005-2007 shows the upward trend, but their positive effects have gradually been decreased over
time. (3) The profitability and debt paying ability of ST companies play very important roles. (4)The effective
approaches of improving ST are corporate restructuring, asset stripping and debt restructuring.

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International Journal of Business and Management   ISSN 1833-3850 (Print)   ISSN 1833-8119 (Online)

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