| Title : | Factors influencing share price behavior of Nepalese insurance companies: a case of Nepal | | Material Type: | printed text | | Authors: | Indra Karki, Author | | Publication Date: | 2017 | | Pagination: | 105p. | | Size: | GRP/Thesis | | Accompanying material: | 9/B | | Languages : | English | | Descriptors: | Share-Price
| | Class number: | 332.632 | | Abstract: | Security market is an economic institution where sale and purchase transactions of securities between subjects of economy on the basis of demand and supply take place. It is a system of interconnection between all participants that provides effective conditions to buy and sell securities, to attract new capital by means of new security issuance, to transfer real assets into financial assets and to invest money for short or long term periods with the aim of deriving profit. The stock markets play a vital role in the financial sector of every economy which drives the economic growth by stabilizing the financial sector. It provides companies with the facility to raise capital for expansion through selling shares, raising capital for businesses, mobilizing savings for investment, facilitating company growth, creating investment opportunities for small investors and etc. The determination of the factors that stimulate the investments in the stock exchange markets has been well researched in the literature both theoretically and empirically.
Most of the empirical work investigates the factors influencing share price behaviormostly in the developed economy. However such studies are lacking in the developing economy. Therefore, this study tries to investigate the factors influencing share price behaviorevidence from Nepalese insurance companies.
The major objective of the study is to examine explanatory power of firm specific and macroeconomic variables on market price of share in the context of Nepalese insurance companies.The study is based on the secondary data of 13 insurance companies for the period of 2007/08 to 2014/15 with a total of 104 observations.The main source of data includes various issues of Nepal Stock Exchange, Insurance Board of Nepal, Financial statistics of NRB, and annual reports of selected Nepalese insurance companies. The pooled cross sectional data analysis has been undertaken in the study. The research design adopted in this study is descriptive and causal comparative research design as it deals with the impact of firm specific and macroeconomic variables on stock marketeffect of Nepalese insurance companies.
The result shows that average market price of share is highest for NLICL (Rs. 1914.75) and lowest for NBCL (Rs. 129.38). The average price earnings ratio is highest for NBCL (Rs. 410.38) and lowest for PICL (Rs. 10.29). The average dividend per is highest for NLICL (Rs. 45.60) and lowest for UICL, NBCL, and SLICL (Re. 0.00).The average size is highest for the year (Rs. 11970.87 million) however the insurance company with lowest average size is NBCL (Rs. 395.12 million). The book value per share shows that it is highest for SIL (Rs. 228.47) and NBCL has the lowest average book value per share of (Rs. 37.17). NLICL has highest average return on equity (25.39 percent) and NBCL has lowest of (-36.69 percent). The gross domestic product is highest for the year 2009/10 of 11.10 percent and lowest for the year 2007/08 of 5.70 percent. The inflation shows that it is highest for 5.90 percent and lowest for 2.30 percent in 2014/15 over 2007/08. The average money supply is highest for the year 27.30 percent and lowest for 12.20 percent in 2010/11 over 2008/09.
The descriptive statistics for selected insurance companies shows that the average market price of share, price earnings ratio, dividend per share, size, book value per share, return on equity, inflation, gross domestic product and money supply are Rs. 572.75, 98.32 times, Rs. 13.66, Rs. 2876.46 million, Rs. 152.86, 10 percent, 9.03 percent, 4.29 percent and 19.61 percent respectively.
The study of selected insurance companies shows that size, money supply and gross domestic product are positively correlated to share price where as inflation is negatively correlated.
The regression analysis reveals that result shows dividend per share, size, book value per share, return on equity, money supply and gross domestic product have positive impact on the market price of share. This indicates that higher dividend per share, size, book value per share, return on equity, money supply and gross domestic product, higher would be the market price of share. However, inflation has negative impact on market price of share. This reveals that higher the inflation, lower would be the market price of share.
The study also shows that size, gross domestic product and money supply have positive impact on the price earnings ratio. This denotes that higher the size, gross domestic product and money supply, higher would be the price earnings ratio. However, dividends per share, book value per share, return on equity and inflation have negative impact on the price earnings ratio. This indicates that higher thedividends per share, book value per share, return on equity and inflation, lower would be the price earnings ratio.
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Factors influencing share price behavior of Nepalese insurance companies: a case of Nepal [printed text] / Indra Karki, Author . - 2017 . - 105p. ; GRP/Thesis + 9/B. Languages : English | Descriptors: | Share-Price
| | Class number: | 332.632 | | Abstract: | Security market is an economic institution where sale and purchase transactions of securities between subjects of economy on the basis of demand and supply take place. It is a system of interconnection between all participants that provides effective conditions to buy and sell securities, to attract new capital by means of new security issuance, to transfer real assets into financial assets and to invest money for short or long term periods with the aim of deriving profit. The stock markets play a vital role in the financial sector of every economy which drives the economic growth by stabilizing the financial sector. It provides companies with the facility to raise capital for expansion through selling shares, raising capital for businesses, mobilizing savings for investment, facilitating company growth, creating investment opportunities for small investors and etc. The determination of the factors that stimulate the investments in the stock exchange markets has been well researched in the literature both theoretically and empirically.
Most of the empirical work investigates the factors influencing share price behaviormostly in the developed economy. However such studies are lacking in the developing economy. Therefore, this study tries to investigate the factors influencing share price behaviorevidence from Nepalese insurance companies.
The major objective of the study is to examine explanatory power of firm specific and macroeconomic variables on market price of share in the context of Nepalese insurance companies.The study is based on the secondary data of 13 insurance companies for the period of 2007/08 to 2014/15 with a total of 104 observations.The main source of data includes various issues of Nepal Stock Exchange, Insurance Board of Nepal, Financial statistics of NRB, and annual reports of selected Nepalese insurance companies. The pooled cross sectional data analysis has been undertaken in the study. The research design adopted in this study is descriptive and causal comparative research design as it deals with the impact of firm specific and macroeconomic variables on stock marketeffect of Nepalese insurance companies.
The result shows that average market price of share is highest for NLICL (Rs. 1914.75) and lowest for NBCL (Rs. 129.38). The average price earnings ratio is highest for NBCL (Rs. 410.38) and lowest for PICL (Rs. 10.29). The average dividend per is highest for NLICL (Rs. 45.60) and lowest for UICL, NBCL, and SLICL (Re. 0.00).The average size is highest for the year (Rs. 11970.87 million) however the insurance company with lowest average size is NBCL (Rs. 395.12 million). The book value per share shows that it is highest for SIL (Rs. 228.47) and NBCL has the lowest average book value per share of (Rs. 37.17). NLICL has highest average return on equity (25.39 percent) and NBCL has lowest of (-36.69 percent). The gross domestic product is highest for the year 2009/10 of 11.10 percent and lowest for the year 2007/08 of 5.70 percent. The inflation shows that it is highest for 5.90 percent and lowest for 2.30 percent in 2014/15 over 2007/08. The average money supply is highest for the year 27.30 percent and lowest for 12.20 percent in 2010/11 over 2008/09.
The descriptive statistics for selected insurance companies shows that the average market price of share, price earnings ratio, dividend per share, size, book value per share, return on equity, inflation, gross domestic product and money supply are Rs. 572.75, 98.32 times, Rs. 13.66, Rs. 2876.46 million, Rs. 152.86, 10 percent, 9.03 percent, 4.29 percent and 19.61 percent respectively.
The study of selected insurance companies shows that size, money supply and gross domestic product are positively correlated to share price where as inflation is negatively correlated.
The regression analysis reveals that result shows dividend per share, size, book value per share, return on equity, money supply and gross domestic product have positive impact on the market price of share. This indicates that higher dividend per share, size, book value per share, return on equity, money supply and gross domestic product, higher would be the market price of share. However, inflation has negative impact on market price of share. This reveals that higher the inflation, lower would be the market price of share.
The study also shows that size, gross domestic product and money supply have positive impact on the price earnings ratio. This denotes that higher the size, gross domestic product and money supply, higher would be the price earnings ratio. However, dividends per share, book value per share, return on equity and inflation have negative impact on the price earnings ratio. This indicates that higher thedividends per share, book value per share, return on equity and inflation, lower would be the price earnings ratio.
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