This is a study on equity share valuation. In this work, the author studied the behavior of certain fundamental factors determining share price in Sri Lanka. It attempts to answer the following question: What is the empirical relationship between equity share price and factors like earning, growth, leverage, and risk and company size?
To assess the relative influence of the above mentioned fundamental factors on share price the author used regression analysis with standard OLS assumption and continuous cross-section analysis was carried out with log linear regression model for the period 1993 through 2001. The sample consisted of 30 shares from a group of 239 shares of firms in all industries except the bank and insurance industry.
On the basis of this study, the author found out that dividend appears a powerful influence on share than growth and retained earnings. Business risk and financial risk cannot to be assessed which are redundant variables. This means there are relatively free from major risk in Sri Lanka Stock Market. Company size is considerable influence on share prices in which large companies enjoy high value of share. On the basis of these findings I may make the following observation about the Stock Market in Sri Lanka.
Inhaltsverzeichnis (Table of Contents)
- Preface
- Chapter 1: Introduction
- Introduction
- The role of a share market
- History of the stock exchanges
- The development of the Sri Lankan share market
- The Colombo Stock Exchange (CSE)
- The significance of the study
- Problem of the study
- Objectives of the study
- The limitations of the study
- Organisation of the study
- Chapter 2: Literature Review
- Introduction
- Models of Equity Valuation
- The early models
- The Durand model
- Cost of Capital Model
- Gordon Model
- A some other important empirical studies
- Some methodological observations
- Substantive findings
- Dividend, dividend payout ratio and retained earnings
- Growth
- Risk
- Leverage
- Size
- Chapter 3: Research Design
- Introduction
- Scope of the study
- Sample selection
- Criteria for selection of companies
- Sample of cross sections
- Conceptualisation
- Return
- Growth
- Risk
- Leverage
- Size
- Formulating hypotheses
- The data
- Method of investigation
- Measures of variables
- The model
- Chapter 4: Data Analysis and Presentation
- Introduction
- Result Of Estimations
- Choice of the return measure
- Choice of the growth measure
- Choice of the risk measure
- Choice of the size measure
- Choice of the leverage measure
- Discussion of results
- Over-all performance
- Performance of an independent variables
- Chapter 5: Main Findings and Recommendations
- Introduction
- Main findings
- Recommendations
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This study investigates the valuation of equity shares in Sri Lanka, specifically exploring the relationship between share price and key fundamental factors such as earnings, growth, leverage, risk, and company size. The study aims to understand the relative influence of these factors on share prices, using regression analysis and cross-section analysis.- Analyzing the relationship between share price and fundamental factors like earnings, growth, leverage, risk, and company size.
- Determining the relative influence of these factors on share price in the Sri Lankan stock market.
- Understanding the sophistication of the equity share market in Sri Lanka.
- Examining the role of dividend and company size in share valuation.
- Assessing the presence and impact of risk factors in the Sri Lankan stock market.
Zusammenfassung der Kapitel (Chapter Summaries)
- Chapter 1 introduces the study, providing an overview of the financial market, the role of the share market, and the history of stock exchanges. It then focuses on the Sri Lankan share market, highlighting the significance and development of the Colombo Stock Exchange (CSE). The chapter outlines the objectives and limitations of the study, emphasizing its focus on exploring the relationship between share price and fundamental factors.
- Chapter 2 delves into a literature review, examining various models of equity valuation, including the early models, the Durand model, the Cost of Capital Model, and the Gordon Model. It explores significant empirical studies and methodological observations, providing a foundation for the research design and methodology used in the study. The chapter also discusses substantive findings related to dividend, growth, risk, leverage, and size.
- Chapter 3 outlines the research design and methodology, including the scope of the study, sample selection, and conceptualisation of key variables such as return, growth, risk, leverage, and size. The chapter also formulates hypotheses and discusses data sources, methods of investigation, and measures of variables.
- Chapter 4 presents the data analysis and results, including the choice of return, growth, risk, size, and leverage measures. It discusses the overall performance of the model and the performance of independent variables, providing insights into the relationship between share price and the key factors explored.
- Chapter 5 outlines the main findings of the study and provides recommendations based on the analysis. This chapter discusses the implications of the findings for understanding the Sri Lankan equity share market and its valuation practices.
Schlüsselwörter (Keywords)
Equity Share Valuation, Sri Lanka Stock Market, Share Price, Fundamental Factors, Earnings, Growth, Leverage, Risk, Company Size, Regression Analysis, Cross-Section Analysis, Dividend, Dividend Payout Ratio, Retained Earnings, Colombo Stock Exchange (CSE).- Quote paper
- Dr. Sriyantha Fernando (Author), 2003, An Assessment of the Influence of Fundamental Factors on Share Prices in Sri Lanka, Munich, GRIN Verlag, https://www.grin.com/document/373464
