1. Discussion of “Valuation of China’s Stock Market: Mispricing of Earnings Components” Chuan-Yang Hwang

2. Summary Separate Earnings of China’s stock market into Core (CE) and Non- core (NCE) components. CE is more persistent than NCE as expected. Investors underreact to CE and overreact to CE. A profitable trading strategy can be constructed by long stock with hihg CE and short stocks with low NCE– Chinese stock market is not efficient.

3. Comments (1) Gongmeng Chen, Michael Firth &Daniel Ning Gao (2011):The Information Content of Earnings Components: Evidence from Chinese Stock Markets, European Accounting Review This paper show exactly the same results listed in the summary. It has somewhat longer data 1995-2008 (1995-2005 in this paper). It also examine the mispricing related to ownership (private firm vs. SOE).

4. Comments (2) In Table 5, Would the results hold with the following specification? The t values in pooled regression are overstated, should use cluster standard deviation to calculate t valued. To differentiate from the publish paper, consider studying how your results depend on information environment (such as firm size, analyst coverage).