| Title : | The relationship between firm's financial performance and stock return of Nepalese commercial banks | | Material Type: | printed text | | Authors: | Sunita Shrestha, Author | | Publication Date: | 2017 | | Pagination: | 113p. | | Size: | GRP/Thesis | | Accompanying material: | 9/B | | Languages : | English | | Class number: | 338.604 | | Abstract: | The investment on stock has become one of the quite attractive option of both existing and potential investors. It is not only demanded by the high class investors, but also has attracted the interest of small investors. The high rate of return pushes the investors to invest in stocks, but many of them do not have much knowledge about its operations and factors affecting to stock return’s fluctuations. There are various internal and external factors that influence the stock return. The financial performance of companies are most essential internal factors that the investors use in making decisions whether to invest in stock or not? It can give visibility to investors,which plays a significant role to gain reliable and consistent return by selecting winning portfolio.
This study attempts to examine the relationship between firm’s financial performance and stock return of Nepalese commercial banks. The study is based on secondary data of 18 commercial banks with 144 observations for the period of 2007/08 to 2014/15. Data and informationhave been collected form Nepal Stock Exchange, Security Exchange Board of Nepal, Banking and Financial Statistics of NRB and annual reports of the selected commercial banks.The research design adopted in this study is descriptive and causal comparative research design as it deals with the relationship between firm’s financial performance and stock return of Nepalese commercial banks.
The result shows that average market price per share is highest for SCBNL (Rs. 3285) and lowest for SUBL (Rs. 215.50). The average stock return is highest for NBBL (27.01 percent) and lowest for SCBNL (-5.70 percent). The average excess return is highest for NBBL (23.56 percent) and lowest for SCBNL (-9.14 percent). The average return on assets is highest for NBBL (5.04 percent) and lowest for MBL (0.71 percent). The average dividend yield is highest for NIBL (4.46 percent) and lowest for NCCBL (0.93 percent). The average earning yield is highest for NBBL (16 percent) and lowest for MBL (2.02 percent). The average price earnings ratio is highest for MBL (79.29 times) and lowest for NBBL (8.11 times). The average book to market ratio is highest for NCCBL (0.49 times) and lowest for SCBNL (0.10 times). The average assets debt to equity ratio is highest for NSBIBL (14.18 times) and lowest for NBBL (1.36 times). The average profit after tax is highest for NABIL (Rs. 1591.01 million) and lowest for MBL (Rs. 204.26 million).
The descriptive statistics for selected commercial bank shows that the average market price per share, stock return, excess return, dividend yield, earning yield, price earnings ratio book to market ratio, debt to equity ratio and profit after taxare Rs. 915.87, 7.90 percent, 4.45 percent, 1.89 percent, 2.58 percent, 5.14 percent, 28.06 times, 0.30 times, 9.91 times and Rs. 653.12 millionrespectively.
The correlation matrix shows that return on assets, dividend yield, earning yield, price earnings ratio, debt to equity ratio and profit after tax are positively related to market price per share,while book to market ratio is negatively related to market price per share. The result states that return on assets has positive relationship with stock return and excess return. However, dividend yield and earning yield have negative relationship with stock return and excess return. On the other hand, price earnings ratio is positively related to stock return and excess return, whereas book to market ratio is negatively related to stock return and excess return. Furthermore, the debt to equity ratio and profit after tax are positively correlated to stock return and excess return.
The regression analysis reveals that return on assets and price earnings ratiohave positive impact on market price per share. This indicates that higher return on assets and price earnings ratio, higher would be the market price per share. However, book to market ratio has negative impact on market price per share. This reveals that higher the book to market ratio, lower would be the market price per share. On the other hand, profit after tax has positive impact on market price per share. This states that higher the profit after tax, higher would be the market price per share.
The study also shows that price earnings ratio has positive impact on stock return and excess return. This reveals that higher the price earnings ratio, higher would be the stock return and excess return. However, book to market ratio has negative impact on stock return and excess return. This states that higher the book to market ratio, lower would be the stock return and excess return. On the other hand, the profit after tax has positive impact on stock return and excess return. This denotes that higher the profit after tax, higher would be the stock return and excess return. The study also reveals that price earnings ratio, book to market ratio and profit after tax are major determinants of stock return in Nepalese commercial banks.
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The relationship between firm's financial performance and stock return of Nepalese commercial banks [printed text] / Sunita Shrestha, Author . - 2017 . - 113p. ; GRP/Thesis + 9/B. Languages : English | Class number: | 338.604 | | Abstract: | The investment on stock has become one of the quite attractive option of both existing and potential investors. It is not only demanded by the high class investors, but also has attracted the interest of small investors. The high rate of return pushes the investors to invest in stocks, but many of them do not have much knowledge about its operations and factors affecting to stock return’s fluctuations. There are various internal and external factors that influence the stock return. The financial performance of companies are most essential internal factors that the investors use in making decisions whether to invest in stock or not? It can give visibility to investors,which plays a significant role to gain reliable and consistent return by selecting winning portfolio.
This study attempts to examine the relationship between firm’s financial performance and stock return of Nepalese commercial banks. The study is based on secondary data of 18 commercial banks with 144 observations for the period of 2007/08 to 2014/15. Data and informationhave been collected form Nepal Stock Exchange, Security Exchange Board of Nepal, Banking and Financial Statistics of NRB and annual reports of the selected commercial banks.The research design adopted in this study is descriptive and causal comparative research design as it deals with the relationship between firm’s financial performance and stock return of Nepalese commercial banks.
The result shows that average market price per share is highest for SCBNL (Rs. 3285) and lowest for SUBL (Rs. 215.50). The average stock return is highest for NBBL (27.01 percent) and lowest for SCBNL (-5.70 percent). The average excess return is highest for NBBL (23.56 percent) and lowest for SCBNL (-9.14 percent). The average return on assets is highest for NBBL (5.04 percent) and lowest for MBL (0.71 percent). The average dividend yield is highest for NIBL (4.46 percent) and lowest for NCCBL (0.93 percent). The average earning yield is highest for NBBL (16 percent) and lowest for MBL (2.02 percent). The average price earnings ratio is highest for MBL (79.29 times) and lowest for NBBL (8.11 times). The average book to market ratio is highest for NCCBL (0.49 times) and lowest for SCBNL (0.10 times). The average assets debt to equity ratio is highest for NSBIBL (14.18 times) and lowest for NBBL (1.36 times). The average profit after tax is highest for NABIL (Rs. 1591.01 million) and lowest for MBL (Rs. 204.26 million).
The descriptive statistics for selected commercial bank shows that the average market price per share, stock return, excess return, dividend yield, earning yield, price earnings ratio book to market ratio, debt to equity ratio and profit after taxare Rs. 915.87, 7.90 percent, 4.45 percent, 1.89 percent, 2.58 percent, 5.14 percent, 28.06 times, 0.30 times, 9.91 times and Rs. 653.12 millionrespectively.
The correlation matrix shows that return on assets, dividend yield, earning yield, price earnings ratio, debt to equity ratio and profit after tax are positively related to market price per share,while book to market ratio is negatively related to market price per share. The result states that return on assets has positive relationship with stock return and excess return. However, dividend yield and earning yield have negative relationship with stock return and excess return. On the other hand, price earnings ratio is positively related to stock return and excess return, whereas book to market ratio is negatively related to stock return and excess return. Furthermore, the debt to equity ratio and profit after tax are positively correlated to stock return and excess return.
The regression analysis reveals that return on assets and price earnings ratiohave positive impact on market price per share. This indicates that higher return on assets and price earnings ratio, higher would be the market price per share. However, book to market ratio has negative impact on market price per share. This reveals that higher the book to market ratio, lower would be the market price per share. On the other hand, profit after tax has positive impact on market price per share. This states that higher the profit after tax, higher would be the market price per share.
The study also shows that price earnings ratio has positive impact on stock return and excess return. This reveals that higher the price earnings ratio, higher would be the stock return and excess return. However, book to market ratio has negative impact on stock return and excess return. This states that higher the book to market ratio, lower would be the stock return and excess return. On the other hand, the profit after tax has positive impact on stock return and excess return. This denotes that higher the profit after tax, higher would be the stock return and excess return. The study also reveals that price earnings ratio, book to market ratio and profit after tax are major determinants of stock return in Nepalese commercial banks.
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338 Micro-économie : activités et comportements économiques des individus, consommation
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