| Summary: | 碩士 === 中原大學 === 企業管理研究所 === 94 === Art market has been essential portion in the Beauty industry and grew rapidly for past three decades. Particularly, Chinese art markets hit a record high for sales in the global markets in 2004, including Sotheby’s and Christie’s auction houses in Hong Kong. Art auction has become an important alternative for investors to obtain high rate of return on investments in recent years. Unlike other financial instruments, art is unique and has product heterogeneity, which is quite different from common stocks and mutual funds. This study attempts to examine the rate of return on Chinese paintings and compare it with that on other investments, as well as to explore whether the portfolio consisting of modern Chinese paintings and common stock diversifies the risk or not.
This work employs 32,756 modern Chinese paintings by 159 well-known artists sold at auction houses in Chinese art market over the period of 1994-2004 to construct a hedonic price index, as well as applies the Capital Asset Pricing Model (CAPM) to analyze the price movements of Chinese paintings.
This study finds that the hedonic regression model captures the willingness to pay for perceived attributes in the artwork. For instance, the result suggests Chinese paintings drawn by the most famous five artists, (i.e., Bao-Shi Fu, Bei-Hong Xu, Tian-Shou Pan, Bai-Shi Qi and Keran Li), the works executed in ink and colors, the material with silk and the mounting form by employing album leaf are associated with higher prices than others.
The findings also indicate that the real rate of return on modern Chinese paintings during the period of 1994 to 2004 is 4.61%, which is ranked between that on common stocks (8.44%) and that on risk-free rate (2.12%) during the same period. The results also show that there is a very high volatility in Chinese painting market while there is not a significant relationship between Chinese paintings and common stocks.
This work concludes that the modern Chinese painting is a very good investment object. Also the portfolio consisting of modern Chinese paintings and common stock can reduce risk effectively and produce fair rate of return consequently.
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