Exploring the Relationship between Financial Ratios and Market Stock Returns

Musallam, Sami R.M.

doi:10.17015/ejbe.2018.021.06

Cited by 35 publications

(32 citation statements)

References 28 publications

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“…However, investors could still use this model to predict stock return in Jordan. These results are consistent with Allozi and Obeidat (2016), Afrino and Masdupi (2019), Kai and Abdrahman (2018), Musallam (2018), Din (2017), Stefano (2015), who suggested that the variance in stock return can be explained by accounting and market indicators and financial ratios.…”

Section: Discussionsupporting

confidence: 88%

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The Effects of Accounting and Market Indicators towards Stock Return of Amman Stock Exchange Index Constituents

Alswalmeh¹

2021

jefms

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The returns of ASE companies and share trading have significantly weakened. Numerous companies have been liquidated due to bankruptcy. Investors appear to be less able to find desired investments under these critical conditions. In addition, the investors in Amman Stock Exchange face challenges in determining the accounting and market indicators that affect the stock return. Therefore, this study investigates the effect of twelve accounting and market indicators on the stock return. A yearly data of indicators and company stock price are collected from the ASE website. Panel generalised least squares regression analysis (GLS) has been conducted to accomplish the research objective. Out of twelve accounting and market indicators, the study revealed the TOA had the highest significantly positive effect on stock return. ROA, EPS, STR, and PBV also had a significant positive influence on stock return. In addition, DR had a significantly negative impact on stock return, while the effect of BPS was marginally negative. Besides, MC, ROE, NPM, CR, and PER did not affect the stock return. This study could help investors and portfolio managers to identify the indicators that affect stock returns of ASE Index companies. Further studies in other emerging markets will support the results that came out in this study.

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Section: Discussionsupporting

confidence: 88%

“…The results are consistent with economic theory. This result is consistent with the findings of Kai and Abdrahman (2018) and Musallam (2018). Additionally, EPS had a statistically significant and positive impact on stock return, B = 0.009.…”

supporting

confidence: 91%

The Effects of Accounting and Market Indicators towards Stock Return of Amman Stock Exchange Index Constituents

Alswalmeh¹

2021

jefms

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“…Companies that have high equity do not always produce high profits, but if the profits are large or small, they will not necessarily be allocated to stock returns. Low profit might be allocated to cover the company's debt interest (RM Musallam, 2018). Such conditions can be caused by external factors, namely declining economic conditions and internal factors of the company.…”

Section: Effect Of Profitability On Return Defensive Stocksmentioning

confidence: 99%

Understanding Defensive Stocks with Company Fundamentals and Dividend Policy Variables as Moderation

Mahfudz¹,

Wijayanto²

2020

MAJ

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The purpose of this study was to determine the effect of Return on Equity, Firm Size, Debt Equity Ratio and Price Earning Ratio on return defensive stocks with Dividend Policy as Variable Moderation in Manufacturing Companies. The study population was manufacturing sector companies listed on the Indonesia Stock Exchange from 2015 to 2018. There were 61 companies sampled using purposive sampling techniques. The analytical method uses multiple linear analysis and moderated Regression analysis. The results showed the Firm Size variable had a significant positive effect and the DER variable had no significant positive effect while the ROE and PER variables had no significant negative effect on return defensive stocks. The MRA test states that the Dividend Payout Ratio variable strengthens the effect of Firm Size on return defensive stocks while the ROE, DER and PER variables are weakened by the effect on return defensive stocks by dividend policy. Future studies are expected to use other variables that might increase or decrease stock returns.

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“…Asif et al (2016) also found that there is an ability for accounting information to predict the price of the stock, as it was found that the earnings per share, book value per share, the capital used per share and the operating cash flow per share have an impact on the market prices of corporate stocks. Musallam (2018) concluded that the earnings per share, earnings yield ratio, and dividend yield ratio have a large and positive relationship with fluctuations in the stock prices in the Qatari market, while the market to book value ratio, price to earnings ratio, dividends earnings ratio has a slight relationship with With fluctuations in stock prices. Otekunrin et al (2018) concluded that the earnings per share, net assets per share, debt ratio and return on asset ratio are positively and significantly related to the market prices of stocks.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

The Impact of Stock Characteristics on Its Market Price in Jordanian Commercial Banks

Shammout¹

2020

MAS

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The study aims at identifying the impact of stock characteristics represented by (Earnings Per Share (EPS), Book Value Ratio (BVR), Dividends Per Share (DPS), Dividends Payout Ratio (DPR), Market to Book Ratio (MBR), Price Earnings Ratio (PER), and Yield Per Share (YPE)) on the market stock price in the 13 commercial banks in Jordan during the period from 2005 to 2018. Multiple Linear Regression has been used to illustrate the impact of the independent variables and the controlling variables on the dependent variable. The study has found that there is a significant impact of stock characteristics on its market price at the Jordanian commercial banks. The study also found a statistically significant impact for each book value ratio, dividends per share, market to book ratio, price-earnings ratio, and yield per share on the market price at the Jordanian commercial banks. However, there was no statistically significant effect for each of the earnings per share and dividend’s payout ratio on the market price at the Jordanian commercial banks. The study recommends that investors, analysts, and decision-makers use the characteristics of stocks when carrying out analyses before making important investment decisions that can affect their wealth in the future through forecasting stock prices.

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Exploring the Relationship between Financial Ratios and Market Stock Returns

Abstract: Abstract

Cited by 35 publications

References 28 publications

The Effects of Accounting and Market Indicators towards Stock Return of Amman Stock Exchange Index Constituents

The Effects of Accounting and Market Indicators towards Stock Return of Amman Stock Exchange Index Constituents

Understanding Defensive Stocks with Company Fundamentals and Dividend Policy Variables as Moderation

The Impact of Stock Characteristics on Its Market Price in Jordanian Commercial Banks

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