The impact of dividend policy on price-earnings ratio

Jitmaneeroj, Boonlert

doi:10.1108/raf-06-2015-0092

Cited by 14 publications

(11 citation statements)

References 46 publications

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“…Additionally, findings support the conclusions derived by Baboukardos and Rimmel (2016). The F1 variable being statistically meaningful for both models is in line with the findings of (Jitmaneeroj, 2017). Moreover, our results are in parallel with the existing studies in the literature on stock pricings by Rapach and Wohar (2005) and Campbell and Schiller (1988).…”

Section: Discussionsupporting

confidence: 91%

Does Mandatory Integrated Reporting Affect Stock Prices an Empirical Study on the Johannesburg Stock Exchange

SAYAR¹,

Tokdemir²

2018

JRB

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Integrated Reporting (IR) is one of the new reporting phenomena that has gained widespread attention over the last decade because of the growing demand for non-financial forward-looking information. It combines financial and non-financial information such as governance and social information under one report. Even though this implementation framework has been published, there is a need to address its effects on share prices and earnings per share ratio from an analytical perspective. In this paper, we have adopted a panel data analysis to test the effects of mandatory IR implementation on companies listed in the Johannesburg Stock Exchange. The connection was established through a panel data analysis on two separate models composed of financial ratios, between the years of 2007 and 2016 using a dummy variable starting from 2011 to incorporate the commencement of mandatory IR. We conclude that compulsory Integrated Reporting has a statistically meaningful relationship with both the share price and earnings per share ratio of companies.JEL Classification: G10, G15, G18, M40, M48 ÖzetEntegre Raporlama kurumsal dünyada son birkaç yıl içinde finansal olmayan geleceğe dönük verilerin raporlaması hususunda artan talepten dolayı dikkati çeken yeni raporlama olgularından biridir. Bu raporlama finansal ve finansal olmayan yönetişim ve sosyal öğeleri tek bir rapor altında bir araya getirmektedir. Uygulama çerçevesinin yayınlanmış olmasına rağmen hisse senedi fiyatları ve hisse başı kazanç üzerindeki etkisi ve uygulanabilirliğinin ele alınması gerekmekte olup literatürde henüz analitik bir çalışma mevcut * Associate Prof. Dr.,

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Section: Discussionsupporting

confidence: 91%

Does Mandatory Integrated Reporting Affect Stock Prices an Empirical Study on the Johannesburg Stock Exchange

SAYAR¹,

Tokdemir²

2018

JRB

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“…Specifically, we made the case for using the price-to-earnings ratio as a proxy for stock value. This can assist in knowing how much investors are willing to pay for each dollar of earnings the company generates [44,45]. By using structural equation modeling, we reported on the positive synergistic effect of the ESG factors on stock value.…”

Section: Discussionmentioning

confidence: 97%

“…Investors require a higher rate of return for firms with higher leverage, as measured by the debt-to-asset ratio, thus resulting in the higher PER [43]. Firms with high market-to-book ratios have high growth opportunities and high PER [44,45]. When the dividend yield is lower, the expected return tends to be lower, which in turn could result in a higher PE ratio [46].…”

Section: Methodsmentioning

confidence: 99%

“…The trailing price-to-earnings ratio is calculated based on the past 12-month earnings per share, whereas the forward price-to-earnings ratio favors the forecasted earnings per share for the next 12 months. However, the forward price-to-earnings ratio is also desirable for investors who believe that stock selections are better made relying on estimates of the future, rather than past earnings [45]. Thus far, we analyzed the value relevance of CS using the trailing price-to-earnings ratio as the main measure of stock value.…”

Section: Robustness Testsmentioning

confidence: 99%

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Corporate Sustainability and Stock Value in Asian–Pacific Emerging Markets: Synergies or Tradeoffs among ESG Factors?

Budsaratragoon

Jitmaneeroj

2021

Sustainability

Self Cite

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We use structural equation modelling to examine whether multi-dimensional corporate sustainability (CS)—measured by environmental, social and governance (ESG) factors—affects stock value. We find that investors are willing to pay for each dollar of earnings that the highly rated ESG company generates. Moreover, the positive synergistic effect among the ESG factors implies that companies that focus on any single dimension or the equally weighted aggregation of ESG factors understate the value relevance of CS. In other words, successful sustainability practices should comprise all of the dimensions of CS in order to gain benefit from their synergistic effect with stock value. However, the synergistic effect among ESG factors does not imply that the individual components of CS should be weighted equally in sustainability practices. Our findings show that social engagement emerges as the main driver of CS and should be weighted more heavily than the other factors in sustainability practices. Interestingly, when we account for corporate economic performance, we find that investors put more (less) value on CS when corporate economic performance is weak (strong). This implies that economic performance and ESG performance contain similar information, and that their effects on stock value subsume each other.

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“…Wenjing [35] found that "the price earnings ratio is unaffected by the dividend payout ratio". Jitmaneeroj [36] came to the conclusion that "there is little correlation between the dividend payout ratio and the price-earnings ratio".…”

Section: Literature Reviewmentioning

confidence: 99%

An Empirical Study on Determinants of Price Earnings Ratio: Evidence from Listed Food, Beverage and Tobacco Companies in Colombo Stock Exchange

Sajeetha

Nusaika

Safana

2023

AJEBA

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The Price earnings ratio compares a stock’s price to earnings. By showing the relationship between a company’s stock price and earnings per share (EPS), the Price earnings ratio helps investors to value a stock and gauge market expectations. The ratio is affected by several factors that are responsible for the variations of Price earnings ratio. These variations of Price earnings ratio have significant impact on investor’s perception. This paper attempts to identify the factors and the relationships between the factors and Price earnings ratio of food, beverage, and tobacco companies in Colombo Stock Exchange (CSE). Based on simple sampling, data were taken for this purpose from annual reports of 30 food, beverage, and tobacco companies listed on the CSE for the five-year period from 2015 to 2019. The study focuses on secondary data collected through the published annual reports of the sample. Descriptive statistics, correlation analysis and multiple regression analysis are used to accomplish the objective of this paper. Results revealed that dividend payout ratio and leverage ratio are significant determinants of Price earnings ratio where these both variables have positive influence on Price earnings ratio. Furthermore, return on equity and earnings per share are negative insignificant determinants of Price earnings ratio. Dividend payout ratio and leverage ratio have positive correlation with price earnings ratio. It can be statistically concluded that dividend payout ratio and leverage ratio have positive significant relationship with price earnings ratio. Return on equity and earnings per share have negative correlation with price earnings ratio. Significant values are higher than the test alpha values. Therefore, the researcher can reject the alternative hypothesis. It can be statistically concluded that return on equity and earnings per share have negative insignificant relationship with price earnings ratio. This paper is evidence for fundamental analysts and decision makers to evaluate determinants that explain variations in P/E ratio of food, beverage, and tobacco companies in Sri Lanka.

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The impact of dividend policy on price-earnings ratio

Cited by 14 publications

References 46 publications

Does Mandatory Integrated Reporting Affect Stock Prices an Empirical Study on the Johannesburg Stock Exchange

Does Mandatory Integrated Reporting Affect Stock Prices an Empirical Study on the Johannesburg Stock Exchange

Corporate Sustainability and Stock Value in Asian–Pacific Emerging Markets: Synergies or Tradeoffs among ESG Factors?

An Empirical Study on Determinants of Price Earnings Ratio: Evidence from Listed Food, Beverage and Tobacco Companies in Colombo Stock Exchange

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