An Investigation on the Impact of the Financial Ratios and Growth Rates on Future Abnormal Stock Returns (Case Study: Companies Listed in the Cement Industry)

Subject Areas : Industrial Management

Delir Nasera-badai ¹ (M.A in Accounting, Academic Member of Islamic Azad University, Sanandaj Branch)
Bizhan Khazduzi ² (Academic Member of Islamic Azad University, Sanandaj Branch)
Omid Mahmoudi Khoshroo ³ (Academic Member of Islamic Azad University, Sanandaj Branch)

Received: 2018-01-11 Accepted : 2018-01-11 Published : 2011-10-23

Keywords:

Abstract :

This survey has been done among companies listed in the cement industry in Tehran Stock Exchange during eight years from 1380 to1388. The paper studies the effect of the simultaneous use of financial ratios and growth rates on future stock returns which is proven unusual. The data has been collected by using the new software named: “Rahavard Novin”. The results are based on the after event method and using F and T-tests and linear regression statistical analysis. The results show that the hypothesis has not been confirmed yet. That is, the use of financial ratios and growth rates do not affect future abnormal stock returns simultaneously. Using stepwise regression test, the final model was driven. Thus, only the operational ratios do not have simultaneous effects on the use of financial ratios. Finally, the results obtained from the overall test of the research hypotheses do not confirm the simultaneous impact of the financial ratios on future abnormal stock returns. However, the items in the financial statements reflect the accrual impact of items of financial statements on the process of economic decision making, the influence of the information content of all items is not the same. In other words, liquidity ratios have the highest effect and other ratios like profitability, investment and operational ratios reportedly have high effects on the abnormal stock returns.