| Summary: | With the fast development of economy, China has drawn much attention from foreign businesses and scholars in recent decades. The special condition and cultural environment of the country has been keeping businesses in the country different from the situations in other parts of the world.
After 1970s, there was an increasing focus in the relationship between risk and return among economists. Many theories, such as Expected Utility Theory, Prospect Theory, and Positive Accounting Theory, have been put forward to study such relationship.
However, there were few studies that link China together with the risk-return relationship. Due to the special condition and history of China, researching the risk-return relationship in the country should be interesting and useful. Thus, this study is going to exam the relationship between risk and return in Chinese listed companies, mainly focus on Prospect Theory.
Key words: China, Chinese listed companies, risk-return relationship, Prospect Theory, panel data regression
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