Financial Ratios and Stock Return: Evidence on selected Plantation Companies in Malaysia
UNIVERSITI MALAYSIA SARAWAK (UNIMAS)
SEMESTER 2 2012/2013
FACULTY OF ECONOMICS AND BUSINESS (FEB)
EBF 3183 FINANCE SEMINAR
(Group ASSIGNMENT)
Financial Ratios and Stock Return: Evidence on selected Plantation Companies in Malaysia NAME : VICTORIA AK JUTI 28578
VENOSHNI A/P MANOGARAN 28577
PHUA WEE WEE 27952
TEOH CHIEN NI 28513
LING LING 26752
GROUP : 1
PROGRAMME : FINANCE
Financial Ratio and Stock Return: Evidence on selected Plantation Companies in Malaysia
Abstract
This paper is to investigate the predictive ability of several financial ratios for stock return in Malaysia specifically in plantation industry. 23 listed plantation companies were analysed for the period from 2008 to 2012. Four of the common financial ratios were take into consideration in this study. These financial ratios include dividend yield (DY), book to market ratio (B/M), earning per share (EPS), and firm size. Pool ordinary least squares regression (OLS) method is adopted to estimate the predictive regression. The descriptive statistics indicate that there is a negative relationship between the dependent variable and the two independent variables include B/M and EPS. In contrast, the firm size and DY is positive correlated with the stock return. In addition, the empirical results indicate that dividend yield is the best predictor on stock return in the context of Malaysia’s plantation sector.
Section 1 Introduction
Introduction
Research on predicting stock returns using various variables such as inflation, accuracy of disclosure of public information, discount rates are widely discussed in past studies. Return is something that investor expects to receive on their original investment in the future. Alternatively, financial ratios have provided investors another method in predicting the stock return. Previously, financial ratios are used to evaluate performance of a company.
So far, numerous studies on stock
SEMESTER 2 2012/2013
FACULTY OF ECONOMICS AND BUSINESS (FEB)
EBF 3183 FINANCE SEMINAR
(Group ASSIGNMENT)
Financial Ratios and Stock Return: Evidence on selected Plantation Companies in Malaysia NAME : VICTORIA AK JUTI 28578
VENOSHNI A/P MANOGARAN 28577
PHUA WEE WEE 27952
TEOH CHIEN NI 28513
LING LING 26752
GROUP : 1
PROGRAMME : FINANCE
Financial Ratio and Stock Return: Evidence on selected Plantation Companies in Malaysia
Abstract
This paper is to investigate the predictive ability of several financial ratios for stock return in Malaysia specifically in plantation industry. 23 listed plantation companies were analysed for the period from 2008 to 2012. Four of the common financial ratios were take into consideration in this study. These financial ratios include dividend yield (DY), book to market ratio (B/M), earning per share (EPS), and firm size. Pool ordinary least squares regression (OLS) method is adopted to estimate the predictive regression. The descriptive statistics indicate that there is a negative relationship between the dependent variable and the two independent variables include B/M and EPS. In contrast, the firm size and DY is positive correlated with the stock return. In addition, the empirical results indicate that dividend yield is the best predictor on stock return in the context of Malaysia’s plantation sector.
Section 1 Introduction
Introduction
Research on predicting stock returns using various variables such as inflation, accuracy of disclosure of public information, discount rates are widely discussed in past studies. Return is something that investor expects to receive on their original investment in the future. Alternatively, financial ratios have provided investors another method in predicting the stock return. Previously, financial ratios are used to evaluate performance of a company.
So far, numerous studies on stock
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