The Internal Financial Determinants of Common Stock Market Price: Evidence from Abu Dhabi Securities Market

Abstract

This study investigates the effect of Earnings per Share (EPS), Dividends per Share (DPS), and Book Value per Share (BVPS) on stock market prices in Abu Dhabi Securities Market. All listed companies in the Abu Dhabi Securities Market are included in this study except those companies which were listed after the starting of year 2002. In addition, those companies which had been prevented from trading in the market for one year or more during the years from 2002 to 2006 were also excluded because the available data of these companies are not adequate. As a result, among the 60 listed firms in Abu Dhabi Securities Market, 22 were excluded. Four hypotheses are under consideration in this study. The simple linear regression method was used to test the first three hypotheses based on t‐test, while the multiple linear regression method was used to test the last hypothesis based on F‐test. Moreover, the correlation method is used to support the findings. The current study found a significant effect of EPS and BVPS on stock market price in the Abu Dhabi Securities Market, whereas no significant effect of DPS was found.