International Journal of Business Management & Research - Volumes & Issues - Volume 11: June 2021, Issue 1

Accounting and market based determinants of stock returns: a study of indian stock market

  • Published: June 2021
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Authors

Dr. Anita

DOI Number

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Keywords

Accounting based ratios, Market based ratios, Panel data regression, Fixed effect model with robust standard errors

Abstract

Stock markets move in an unsystematic manner thus, it is difficult to recognise the stock that will do well. A better insight into the basic fundamental analysis is required when one looks for such stocks which led to creation of wealth in long term. The present study makes an effort to assess the influence of nine company specific factors mainly ratios that assess company’s performance and further these ratios are categorised into two categories i.e. accounting based ratios and market based ratios. Fixed effect model of panel data regression with robust standard errors is estimated to analyse the influence and the findings suggest that Book to market ratio exerts significant positive influence on stock returns which suggest that value stocks generate higher return as compared to growth stocks. However, for the average investor, using the book value strategy alone might not be sufficient in determining stocks intrinsic worth. Thus, the investors are advised to buy the stocks of well established companies that are trading below their book value. But investors should also ensure the profitability of companies. Significant positive influence of size of the firm on stock prices suggests that return generated by the big firms has been much better than the returns of small firms.

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Journal

International Journal of Business Management & Research

ISSN

2249-2143

Periodicity

Bi-Annual

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