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Research on Medical Equipment Industry Based on Fama-French Five Factor Model

In: Proceedings of the 2024 2nd International Conference on Digital Economy and Management Science (CDEMS 2024)

Author

Listed:
  • Junhan Liu

    (Bangor University, Business School)

  • Nuocheng Wang

    (Zhongnan University of Economics and Law)

  • Haowen Yao

    (Jinan University-University of Birmingham Joint Institute)

Abstract

The Covid-19 outbreak since 2019 has affected various industries in the United States to varying degrees. While many industries have stagnated, others have been stimulated. This paper focuses on the stock market of medical equipment to explore the impact of the epidemic on the U.S. healthcare field. The data of various industries in the United States from Kenneth R. French’s database was adopted to analyze. By selecting two time periods before and after the epidemic, the parameters were estimated by multiple regression. Based on the CAPM model, Fame-French five-factor model is introduced since it has been tested by more actual data and has a better explanatory ability. By comparing the parameters before and after the epidemic, it was found that all factors were significant before Covid-19, but SMB, CMA, and HML became insignificant after the outbreak. In addition, the impact of the epidemic has even caused many factors to produce an opposite effect. In view of these phenomena, reasonable speculation and explanation are made according to the operation rules of the stock market and the specific characteristics of the medical industry. In conclusion, the epidemic has raised expectations for the healthcare sector, making factors such as the size of firms and the type of stock less significant. The medical equipment industry as a whole grew rapidly during this period, while some investors tended to favor speculative stocks. The increasing number of trades has steadily increased the value of shares.

Suggested Citation

  • Junhan Liu & Nuocheng Wang & Haowen Yao, 2024. "Research on Medical Equipment Industry Based on Fama-French Five Factor Model," Advances in Economics, Business and Management Research, in: Junfeng Liao & Hongbo Li & Edward H. K. Ng (ed.), Proceedings of the 2024 2nd International Conference on Digital Economy and Management Science (CDEMS 2024), pages 54-61, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-488-4_6
    DOI: 10.2991/978-94-6463-488-4_6
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