Abstract
This study tried to determine firm-specific variables that affect the price-to-earnings ratios of the listed tourism companies at Borsa Istanbul in Turkey over the period 2012q3 - 2020q3. For this purpose, the quarterly financial data of tourism companies were analyzed by using the Generalized Moments Method (GMM). As a result of the analysis, it was determined that a positive relationship existed between Tobin’s Q ratio and price-to-earnings ratio, whereas a negative relationship existed between leverage ratio as well as stock price volatility and price-to-earnings ratio. It was determined that no statistically significant relationship existed between sales size and price-to-earnings ratio.
Highlights
In today’s capital markets, it is possible to fund the real investments made by companies on a long-term basis at affordable costs and terms
In line with the aim of this study, the impacts of Tobin Q ratio, leverage ratio, firm size and stock price volatility on the price-earnings ratios of companies are analyzed by considering the variables used in previously conducted studies in the literature
The quarterly financial data obtained from nine listed tourism companies in Borsa Istanbul over the period 2012Q3 – 2020Q3 are available at the website of the Public Disclosure Platform
Summary
In today’s capital markets, it is possible to fund the real investments made by companies on a long-term basis at affordable costs and terms. The price-to-earnings ratio is one of the most used market multipliers in stock trading decisions and it indicates to what extent investors have to pay for the stock in return for the profit per share earned by a company. Company managers should closely monitor the value of stocks in the securities markets, the prices that investors are willing to pay, and the effects of macroeconomic variables and the financial performance of the company in the formation of these prices.
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