1.
Asma Rafique Chughtai
– 1st Author: Faculty At Virtual Univ. Of Pakistan
2.
Aamir Azeem
– 2nd Author: Scholar At Univ. Of Lahore, Pakistan
3.
Amara
– 1st Author: Faculty At Virtual Univ. Of Pakistan; 2nd Author: Scholar At Univ. Of Lahore, Pakistan
4.
Shahid Ali
– 1st Author: Faculty At Virtual Univ. Of Pakistan; 2nd Author: Scholar At Univ. Of Lahore, Pakistan
Abstract
Investment in capital market is always subject to high
volatility and consequently evaded by risk averse
investors. An analysis of the key factors behind
variation in stock prices can motivate investors to
inject their money into the capital market and invest
in shares of listed companies. Ample researches
have been conducted to explore the determinants of
stock prices comprising company’s specific as well
as macroeconomic factors. However, this study is
focused on excogitating the relationship between
selected companies’specific factors and stock prices
of companies listed on Karachi Stock Exchange of
Pakistan. These include dividend per share, earning
per share, capital employed and retained earnings.
Estimated Generalized Least Square (EGLS) has
been used for analysis of data based on a sample
of 99 listed companies for a period of six years from
2006 to 2011. Findings indicate that dividend per
share and earning per share Possess positive and
significant relationship with market prices,meaning by
an increase in these variables tends to increase stock
prices. These findings are consistent with those of
the previous researches. However, capital employed
and retained earnings are found to have statistically
insignificant relationship with stock prices. It may be
due to collection of data from different sectors and
limited number of data observations for the study. This
study captures descriptive analysis as well as panel
regression for better and in-depth analysis of selected
fundamental variables on stock prices and led us to the
conclusion that companies should focus on earnings
per share and dividend per share to get desired
financing and for well-being of economy.
Keywords Estimated Generalized Least Square (EGLS), Company’s Specific Factors, Stock Prices, Capital Market
