Survey of the effects fundamental variables on stock price

Subject Areas : Journal of Investment Knowledge

Farhad Hanifi ¹ , Mirfeyz Fallah Shams ² , Leyla Abolfazli ³

1 - Assistant Prof. of IAU, Tehran Central Branch
2 - Assistant Prof. of IAU, Tehran Central Branch
3 - M.A of Financial Management, IAU, Tehran Central Branch

Received: 2014-01-08 Accepted : 2013-05-10 Published : 2013-05-10

Keywords: Fundamental analysis, book value of per share, profit per share, predicted profit per share, stockholder rights,

Abstract :

Forecasting stock price and adopting proper strategy for stocks dealing are subject to many research works. Fundamental analysis is one of the interesting points in this regard. The present work surveys to what extent the fundamental variables represents the stock status. The period under study was from 2006 to 2010 and 51 companies in the stock market were under consideration. The data were studied on the weekly and monthly bases. Panel data method was used to study the relation between the variables in the study. Except for stockholder rights turnover, the results showed a positive significant relation between the fundamental variables under consideration including profit per share, predicted profit per share, and book value on one hand and stock price on the other hand. That is, the majority of the variables represent price of stocks for more than 90%. Moreover, the regression model obtained from the annual fundamental variables illustrated higher representation power comparing with seasonal data, which shows merits of longer-term perspective.