1. Discussion of China Connected Transaction paper by Winnie Peng and John Wei Discussant : Fenglan Zhang / Warren Huang Proactive asset pricing for China Connected Transaction Response OSA

2. Proactive Connected Transaction Cycles OSA China connected transaction scandals activities Cycle follow Shanghai A index boom and bust, with connected rights at the peak and STPT at the valley

3. Proactive OSA provide the what, why, how and timing of Connected Transaction News Shock Response Dr. Warren Huang pioneered proactive structural tracking of macroeconomic control impact on 20 industrial sectors 1000 listed Shanghai A, B shares and Hong Kong H, Red Chip shares financial and stocks price performance OSA with /without connected transaction scandals. These structural dynamic simulators tracking global/China investors behavior (psychology ) responding negatively to rights due to earning per share dilution after issue new shares and positive response to ST due to expectation on improved earning after inject good assets to replacing the bad, therefore to confirm Peng’s conclusion

4. Shock response OSA Simulation/Forecasts ST response peak at the news and decay slowly due to favorable impact on future earning stay on to the next earning announcement. Rights response continue to slide immediately after the news due to permanent damage to earning per share by share dilution after issue new shares It will continue until per share earning rebound to original state

5. Need for New generation CPA/CFA Proactive assets pricing and internal auditing control integration into cost, financial accounting tracking Current reactive statistical asset pricing based corporate governance internal and external (big 4 accounting) auditing are incapable of tracking forecast the dynamic assets prices and its connected transactions scandals Suggest for future works: NEW generation CPA/CFA training for internal/external auditing knowledgeable with asset pricing dynamics and investors sentiment psychological speculation behavior impact The executives are taking advantages of market speculation.

6. Recommendation : Connected Transaction impact on financial and stock prices performance Further study on the share dilution, asset prices and trading volume impact on financial, stock rice performance and news response slide amplitude And asset quality ( prices ) and quantity injection on financial, stock price performance and response peak height. Big four accounting does not help the situation as it happened in ENRON and De Touche restated 560 million sales for China Koloon Appliance 2004