Potentiality in Valuation: PB-ROE Decoupling and Event-Based Trading Irrationality in the Chinese Retail Market

The current paper is an empirical investigation into the PB-ROE connection and event-related dynamics related to valuation in the Chinese retail industry based upon 2021-2025 samples of 10 A-listed firms (five leaders, five distressed). The results indicate an impressive dichotomy: the correlation between PB and ROE is high and positive among leaders (r=0.68), which reflects the traditional theory of valuation; in case of distressed firm, however, the correlation is negative and significant (r=-0.29) due to speculative distortion. Negative episodes cause 4x bigger PB drops in troubled companies ( -12.7 % vs. leaders -3.2 %), whereas false-positive (e.g., unconfirmed restructurings) events induce temporary bubbles, as could be the case with Dalian Friendship (the firm has a 73% PB rise/fall). Importantly, there is critical compatibility between leaders and semi-strong market efficiency as distressed firms are shown noise trader dominance, which disapproves the assumptions of EMH. We will suggest the use of the Event-Adjusted Valuation Model (EAVM) of event authenticity, intensity, and persistence in correcting the emerging-market mispricing that will give a guide to the investors not to fall into speculative trappings in fragile institutions.

Authors

Institutions

Publication Details

Journal
Advances in Economics Management and Political Sciences
Published
2025-09-24
DOI
https://doi.org/10.54254/2754-1169/2025.gl27231
Primary Topic
Financial Reporting and Valuation Research
Type
article
Field-Weighted Citation Impact
0.00
Controls
|||
ALL TIME
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
article

Potentiality in Valuation: PB-ROE Decoupling and Event-Based Trading Irrationality in the Chinese Retail Market

Yujie Huang
Advances in Economics Management and Political Sciences
Financial Reporting and Valuation Research
article

Potentiality in Valuation: PB-ROE Decoupling and Event-Based Trading Irrationality in the Chinese Retail Market

Yujie Huang
article en

Abstract

The current paper is an empirical investigation into the PB-ROE connection and event-related dynamics related to valuation in the Chinese retail industry based upon 2021-2025 samples of 10 A-listed firms (five leaders, five distressed). The results indicate an impressive dichotomy: the correlation between PB and ROE is high and positive among leaders (r=0.68), which reflects the traditional theory of valuation; in case of distressed firm, however, the correlation is negative and significant (r=-0.29) due to speculative distortion. Negative episodes cause 4x bigger PB drops in troubled companies ( -12.7 % vs. leaders -3.2 %), whereas false-positive (e.g., unconfirmed restructurings) events induce temporary bubbles, as could be the case with Dalian Friendship (the firm has a 73% PB rise/fall). Importantly, there is critical compatibility between leaders and semi-strong market efficiency as distressed firms are shown noise trader dominance, which disapproves the assumptions of EMH. We will suggest the use of the Event-Adjusted Valuation Model (EAVM) of event authenticity, intensity, and persistence in correcting the emerging-market mispricing that will give a guide to the investors not to fall into speculative trappings in fragile institutions.

Advances in Economics Management and Political SciencesVol. 216(1)
University of Indianapolis (US)
Openalex Percentile: Top 62%
Financial Reporting and Valuation Research
AI Navigator

Ask Laika to Summarize, Analyze, and Connect papers live on the map.

Summarize Papers & Methodologies

Extract key findings, datasets, and comparative methods across publications.

Benchmark Rankings & Visual Analytics

Rank top research institutions, authors, funders, topics, and journals by Field-Weighted Citation Impact (FWCI) and paper volume with instant charts.

Connect Distant Disciplines

Bridge topological clusters on the map to find hidden collaborative intersections.