Abstract
The current research examined the relationship and relative importance of financial regressors on Peruvian gold mining companies´ stock prices from 2009 to 2018. Chosen regressors were earnings per share, dividend per share and dividend yield. Fixed effects analysis was employed for regression analysis and decomposition for the relative importance study. Assumptions of stationarity, independence, no-multicollinearity, homoscedasticity and specification were fulfilled. Also, the values of Owen and Shapley were employed for decomposing . It was found that earnings per share and dividend per share had a positive effect on the dependent variable; while dividend yield was found to be negatively related to stock price. Moreover, by the usage of decomposition it was noticed that the order of regressors importance was earnings per share, dividend per share and dividend yield. Then, it was stated that gold mining stock prices had a high dependence on profits and dividend payments in the analyzed period which can be related to the bearer’s expectations.
Highlights
There are financial advisors who suggest investing in commodities as way to reduce risk in a portfolio and increase profits
The analysis found that ROE, book value per share, dividend per share and price earnings had positive effects on market share price, while dividend yield impacted negatively on the dependent variable
The current research main objective was to identify which regressors explained the best gold mining companies’ common stock market prices from 2009 to 2018. Regressors such earnings per share, dividend per share, and dividend yield were chosen as potential explanatory factors
Summary
There are financial advisors who suggest investing in commodities as way to reduce risk in a portfolio and increase profits. Hard commodities are natural resources extracted or mined; while soft commodities are related to goods from the agricultural sector (Shakil et al, 2018). Gold is often seen as the least risky investment (Ahmed & Vveinhardt, 2018). This commodity is employed as raw material for jewelry, coins, medals and electronic products (Fabozzi et al, 2008). An option for not receiving direct exposure to commodities volatility is to invest in commodity stocks; i.e. stock from mining or energy companies (Fabozzi et al, 2008)
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