Research on influencing factors of price-earning ratio of individual stock in China

The theoretical calculation model for price-earning ratio (PE) is deduced through transforming the dividend discount model so as to find out the main factors affecting price-earning ratio in theory. Stocks of Shanghai Stock Exchange (SSE) 180 index are selected as the sample, and empirical study on the main factors affecting price-earning ratio is carried out based on the panel data during the 2005-2008 periods with variable intercept model. The possible reason of theoretical deviations from analysis results is explained.