Abstract

Stock price is one of the main indicators for measuring firm performance and also the only factor determining shareholders’ wealth. Stock price changes are based on information related to the firm and the market as a whole. This paper is focused on the determinants of the share price of the twenty-six non-financial companies listed in Muscat Securities Market, Oman. In this study, closing annual stock price from 2011 to 2016 is the dependent variable and the firm-specific variables like firm size (logarithm of total assets), dividends payout, earning per share (EPS), debt ratio, price-earnings(PE) ratio, first lag of dependent variable(stock price) are the independent variables in the panel data regression using random effect model. There are two categories of research hypothesis: the first one is based on semi-strong form of Efficient Market Hypothesis (EMH) and second one is based on Arbitrage Pricing theory (APT). To test the second set of hypothesis, oil price, growth rate in GDP and consumer price index are considered as independent variables as they effect performance of business and so do the stock prices. EPS, debt ratio and first lag of stock prices are significant determinants of stock prices. Dividend payout, firm size and PE ratio are insignificant variables.

Highlights

  • The per capita income, employment rate and other economic variables depend a lot upon the performance of business houses in that country

  • Al-Deehani [4] studied the impact of earnings per share (EPS), dividend per share (DPS), previous year dividend, return on equity (ROE), price to book value and cash flow per share on the share prices of companies listed in the Kuwait stock exchange

  • The study aimed at investigating the effect of dividend payout, EPS, a log of total assets, debt ratio, PE ratio and previous year stock price on the current stock price of 26 listed nonfinancial companies in Oman

Read more

Summary

Introduction

In today’s world, the performance of business and corporates of a country plays a very important role in its position as a world leader. One of the most significant theories is the Efficient Market Hypothesis (EMH), which is based on the assumption that rational investors in the market react to the available information like company fundamentals and other important declaration about the company to decide on the stock buying or selling. If they feel that the information is positive, they retain the shares if already bought or buy the one which was not purchased earlier and vice versa.

Review of literature
Methodology
Data and variables
Hypothesis
Panel data analysis
Data analysis
Testing of research hypotheses
Conclusion
Full Text
Paper version not known

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.