Abstract
The role of government-linked companies (GLCs) in Malaysia is vital for the growth of the economy in Malaysia. Nonetheless, the perception from the public at large towards GLCs in Malaysia was unpleasant because of the performance not as it should be as GLCs. Using 17 GLCs listed on the Bursa Malaysia, this study aims to investigate the factors that determine the share prices for the GLCs in Malaysia over the period from 2013 until 2017. The influence of the independent variables, namely return on asset, return on equity, dividend per share, price-earnings ratio, current ratio and acid test ratio on the share prices were tested using multiple regression analysis. The result of this study shows that those variables account for 69.6% of GLCs share price movements. Additionally, dividend per share, price-earnings ratio and acid test ratio are significantly positively related to share prices. These findings imply that for managers to create value for their shareholders, they should increase the dividend paid to shareholders, improve the company's earnings and have more liquid assets.
Highlights
The share price movement is the highest priority for the shareholders to consider when they decide on their investment
The motivation of this study is to examine the determinants of companies' performance, i.e., the share price movement for government-linked companies (GLCs)
This study contributes to the determinants of share prices literature, especially in developing nations, by examining the sample of government-linked companies (GLCs)
Summary
The share price movement is the highest priority for the shareholders to consider when they decide on their investment. The motivation of this study is to examine the determinants of companies' performance, i.e., the share price movement for government-linked companies (GLCs). Udding [1] has suggested that book value per share, earnings per share, dividend and net asset value and, gross domestic product, among others, are elements that affect share prices These factors are primarily because of the essence of the financial viewpoint, which consists of the notion of capital management composition, either equity or debt. In Malaysia, a study by Isa and Lee [4] found that GLCs are underperforming as compared to non-GLCs. The performance is measured by financial structures, namely, return on asset, return on invested capital, return on equity, earnings per share and Tobin's Q ratio.
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