Impact of Total Asset Turnover Ratios on Equity Returns: Dynamic Panel Data Analyses

2020 ◽  
Vol 27 (2) ◽  
pp. 19
Author(s):  
Jeanne-Claire Patin ◽  
Matiur Rahman ◽  
Muhammad Mustafa
Keyword(s):  
Stock Returns ◽  
Stock Prices ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Total Asset ◽  
Operating Efficiency ◽  
Positive Effects ◽  
Short Run ◽  
Asset Turnover ◽  
The Impact

This paper is an empirical exploration of the impact of total asset turnover ratios on stock returns of 1961 US public firms in different types of industries from 2001 to 2015. Stock prices are significantly influenced by operating performance of a company in efficiently utilizing its assets. For that matter, operating efficiency (as measured by total asset turnover ratio) plays a role in portfolio investment decisions. Pedroni’s heterogeneous panel co-integration procedures, associated bivariate error-correction model (ECM), dynamic ordinary least squares (DOLS) and generalized method of moments (GMM) are applied. Both stock returns and total asset turnover ratios in levels are nonstationary with I (1) behavior. Subsequently, both variables are found cointegrated. The panel ECM estimates suggest convergence of variables toward long-run equilibrium at moderate pace with short-run interactive positive feedback effects. Again, both DOLS and GMM estimates reveal short-run contemporaneous positive effects of total asset turnover ratios on stock returns in levels. In view of the findings of this study, firms should strive to improve operating efficiency, among others, to enhance competitiveness and thereby to boost their stock prices for rewarding shareholders.

scholarly journals Impact of Total Asset Turnover Ratios on Equity Returns: Dynamic Panel Data Analyses

2020 ◽  
Vol 27 (1) ◽  
pp. 19
Author(s):  
Jeanne-Claire Patin ◽  
Matiur Rahman ◽  
Muhammad Mustafa
Keyword(s):  
Stock Returns ◽  
Stock Prices ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Total Asset ◽  
Operating Efficiency ◽  
Positive Effects ◽  
Short Run ◽  
Asset Turnover ◽  
The Impact

This paper is an empirical exploration of the impact of total asset turnover ratios on stock returns of 1961 US public firms in different types of industries from 2001 to 2015. Stock prices are significantly influenced by operating performance of a company in efficiently utilizing its assets. For that matter, operating efficiency (as measured by total asset turnover ratio) plays a role in portfolio investment decisions. Pedroni’s heterogeneous panel co-integration procedures, associated bivariate error-correction model (ECM), dynamic ordinary least squares (DOLS) and generalized method of moments (GMM) are applied. Both stock returns and total asset turnover ratios in levels are nonstationary with I (1) behavior. Subsequently, both variables are found cointegrated. The panel ECM estimates suggest convergence of variables toward long-run equilibrium at moderate pace with short-run interactive positive feedback effects. Again, both DOLS and GMM estimates reveal short-run contemporaneous positive effects of total asset turnover ratios on stock returns in levels. In view of the findings of this study, firms should strive to improve operating efficiency, among others, to enhance competitiveness and thereby to boost their stock prices for rewarding shareholders. 

Mandatory CSR expenditure and stock return

2020 ◽  
Vol 28 (6) ◽  
pp. 951-975
Author(s):  
Asit Bhattacharyya ◽  
Md Lutfur Rahman
Keyword(s):  
Least Squares ◽  
Stock Returns ◽  
Least Squares Method ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Reverse Causality ◽  
Endogeneity Bias ◽  
Content Type ◽  
The Impact

Purpose India has mandated corporate social responsibility (CSR) expenditure under Section 135 of the Indian Companies Act, 2013 – the first national jurisdiction to do so. The purpose of this paper is to examine the impact of mandated CSR expenditure on firms’ stock returns by using actual CSR spending data, whereas the previous studies mostly focus on voluntary CSR proxied by CSR scores. Design/methodology/approach The authors estimate their baseline regression by using ordinary least squares(OLS) method. Although the baseline regression involving CSR expenditure and stock returns using ordinary least squares method are estimated, endogeneity and reverse causality biases are addressed by using two-stage least squares and generalized method of moments approaches. These approaches contribute mitigating endogeneity bias and biases associated with unobserved heterogeneity and simultaneity. Findings The findings document that mandatory CSR expenditure has a negative impact on firms’ stock returns which supports the “shareholders” expense’ view. This result remain robust after controlling for endogeneity bias and the use of both standard and robust test statistics. The authors however observe that this result holds for the firms with actual CSR expenditure equal to the mandated amount but does not hold for the firms with actual CSR expenditure greater than the mandated amount. Therefore, the authors provide evidence that CSR expenditure’s impact on stock returns depends on whether firms simply comply the regulation or voluntarily chose an amount of CSR expenditure above the mandated amount. Originality/value The primary contribution is to present a valid and robust evidence of negative effect of mandated CSR spending on firms’ stock returns when the mandatory CSR spending rule is already in place. This study contributes by examining the impact of mandated CSR spending on stock during post-implementation period (2015-2017), whereas other studies by Dharampala and Khanna (2018); Kapoor and Dhamija (2017); and Mukherjee et al. (2018) mainly examined the impact of legislation on Indian CSR. The authors use mandated actual CSR expenditure, whereas previous studies mostly focus on voluntary CSR proxied by CSR scores.

scholarly journals Impacts of Asset Utilization, Market Competition and Market Distance on Stock Returns

2021 ◽  
Vol 28 (1) ◽  
pp. 52
Author(s):  
Jeanne-Claire Patin ◽  
Matiur Rahman ◽  
Muhammad Mustafa
Keyword(s):  
Stock Returns ◽  
Market Competition ◽  
Generalized Method Of Moments ◽  
Data Set ◽  
Public Firms ◽  
Positive Effects ◽  
Long Run ◽  
Dynamic Ols ◽  
Short Run ◽  
Market Distance

To empirically study the effects of asset utilization, market competition and market distance on stock returns of 1961 US public firms of different industry categories over 2001-2015. The heterogeneous panel data set consists of 23,532 (N= 1961*T= 15) observations. Pedroni’s panel co-integration, panel vector errorcorrection model (PVECM), panel dynamic OLS (PDOLS), and panel generalized method of moments (PGMM) are implemented. Both asset utilization and market competition have short-run and long-run positive effects on stock returns. But the effects of market distance are negative. The evidence for convergence toward the long-run equilibrium is very weak. Firms should be strategic to improve asset utilization, be more competitive and expand market distance to maximize stockholders’ wealth.

scholarly journals PENGARUH HASIL ANALISIS FUNDAMENTAL TERHADAP RETURN SAHAM PT RAMAYANA LESTARI SENTOSA TBK

2015 ◽  
Vol 1 (1) ◽  
pp. 19-24
Author(s):  
Herdiyana Herdiyana ◽  
Kartika Kartika
Keyword(s):  
Stock Returns ◽  
Stock Prices ◽  
Stock Price ◽  
Profit Margin ◽  
Total Asset ◽  
Current Ratio ◽  
Total Capital ◽  
Net Profit ◽  
Asset Turnover ◽  
Equity Ratio

ABSTRACTThe company can be knowledge have a good fundamentals if the company has current assets that are notbloated and mediocre sales, total assets and total capital is greater than the total debt, and the value ofEarning Per Share has a positive growth over the last five years. The higher the earning per share, thehigher the stock price. This contrasts with the fact that of the PT Ramayana Lestari Sentosa, Tbk becausethe company has current assets increased growth while the sales growth rate decreased in the period2008-2009. The method used in this research is explanatory survey. The study states that the resultsobtained in the Current Ratio and Debt to Equity Ratio, due to the variable multikolinearitas problemoccurs during testing. Total Asset Turnover and Net Profit Margin partially influence on stock prices.Total Asset Turnover partial effect on stock returns, while Net Profit Margin partially no effect on stockreturns. Simultaneously Total Asset Turnover and Net Profit Margin is the result of fundamental analysisinfluence on stock prices and stock returns.Keywords: Current Ratio, Debt to Equity Ratio, Total Asset Turnover, Net Profit Margin, Stock Price,Dividend Yield.

scholarly journals Global risk factors of NYSE- and NASDAQ-listed shipping companies’ stock returns

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nikiforos T. Laopodis
Keyword(s):  
Risk Factors ◽  
Stock Returns ◽  
Generalized Method Of Moments ◽  
Listed Companies ◽  
Ordinary Least Squares ◽  
Shipping Industry ◽  
Global Risk ◽  
Global Business ◽  
Content Type ◽  
The Impact

Purpose This paper aims to investigate the impact of global macro and other risk factors of the New York Stock Exchange (NYSE)- and National Association of Securities Dealers Automated Quotation (NASDAQ)-listed shipping companies’ stock returns from January 2001 to December 2019. Design/methodology/approach The methodological design includes multi-factor regressions for individual companies, augmented versions of these regressions to examine the likely impact of additional factors and finally panel regressions to assess the impact risk factors on all companies simultaneously. Estimations are done via ordinary least squares and the generalized method of moments. Findings Multi-factor model results showed that some of the US-specific and global macro risk factors surfaced as statistically significant for most of the companies and appeared to exhibit a consistent pattern in the way they affected shipping stocks. Thus, these companies’ exposures emanate mostly from the general US market’s movements and to a lesser extent from other firm-specific factors. Second, from the results of panel specifications, this study observes that domestic risk factors such as unemployment, inflation rates and industrial production growth emerged as significant for the NYSE-listed companies. As regard, the NASDAQ-listed ones, it was found that Libor and the G20 inflation rate were also affecting their stock returns. Research limitations/implications Companies examined are listed only in the US’s NYSE and NASDAQ. Hence, companies listed elsewhere were excluded. It may be concluded that these US exchange-listed companies abide mostly by domestic fundamentals and to some extent to selected global factors. Practical implications The significance of the findings in this study pertains to global investors and shipping companies’ managers alike. Specifically, given the differential sensitivities of the shipping companies to various risk factors (and the global business cycle, in general), it is possible to view the shipping companies’ stocks as a separate, alternate asset class in a global, well-diversified portfolio. Thus, such a broader portfolio would permit investors to earn positive returns and reduce overall risk. Managers of shipping companies would also benefit from the findings in this study in the sense that they should better understand the varying exposures of their companies to changing global and domestic macro conditions and successfully navigate their companies through business cycles. Originality/value Research on the global shipping industry has lagged behind and was mainly concentrated on the investigation of the sources of shipping finance and capital structure of shipping companies, investment and valuation, corporate governance and risk measurement and management. Empirical research on the potential micro and macro determinants of the stock returns of shipping companies, however, is scant. This paper fills the gap in the literature of identifying and evaluating the various macroeconomic, US and international risk, factors that affect shipping companies’ stock returns in a highly financially integrated world.

Determining total CEO compensation of selected US public companies

2018 ◽  
Vol 14 (2) ◽  
pp. 170-187 ◽  
Author(s):  
Matiur Rahman ◽  
Muhammad Mustafa
Keyword(s):  
Ceo Compensation ◽  
Generalized Method Of Moments ◽  
Panel Cointegration ◽  
Ordinary Least Squares ◽  
Data Set ◽  
Public Companies ◽  
Content Type ◽  
Positive Effects ◽  
Short Run ◽  
New Variables

Purpose The purpose of this paper is to explore the effects of total assets, stock performances, CEOs’ tenures, ages, and board sizes on total CEO compensations of 249 publicly listed US companies over a nine-year period from 2004-2012. Design/methodology/approach Pedroni’s panel cointegration, generalized method of moments, and dynamic ordinary least squares methodologies are applied. Findings All variables are non-stationary in log-levels. The findings show significant positive effects of total assets and stock performances on total CEO compensations. The effects of CEO’s tenure and age as well as board size on total CEO compensation deem negative. However, short-run net interactive feedback effects are generally positive with some exceptions. Research limitations/implications The above variables matter in rewarding the CEOs. They should be carefully weighed in for proper formulation of CEO compensation policy. Originality/value This paper applies relatively new econometric tools for a large panel data set. This work considers some new variables for determining CEO compensation in USA. The findings are relatively new with empirical originality.

PENGARUH RASIO KEUANGAN TERHADAP HARGA SAHAM PERUSAHAAN LQ45 PERIODE 2013-2017

2019 ◽  
Vol 5 (1) ◽  
pp. 1-17
Author(s):  
Nuri Maulana Ikhsan ◽  
Yohanes Rully Dermawan
Keyword(s):  
Stock Prices ◽  
Share Price ◽  
Financial Ratios ◽  
Total Asset ◽  
Current Ratio ◽  
Return On Equity ◽  
Book Value ◽  
Earnings Per Share ◽  
Asset Turnover ◽  
Equity Ratio

This study aims to determine the effect of financial ratios on stock prices. Financial ratios used in this study is the Current Ratio, Debt to Equity Ratio, Return On Equity, Total Asset Turnover, Earning Per Share, and Price to Book Value. The type of research used is quantitative to observe the effect of financial ratios on stock prices. This study used a purposive sampling method with a total sample of 20 companies registered in the LQ45 index for the period 2013-2017 and fulfilling the research criteria. The statistical method used is multiple linear regression analysis The results of this study indicate that partially, the variable debt to equity ratio, return on equity, total asset turnover, earnings per share, and price to book value have a significant partial effect on stock prices, while the current ratio variable does not have a partial significant effect on stock prices. Simultaneously the current ratio variable, debt to equity ratio, return on equity, total asset turnover, earnings per share, and price to book value have a significant simultaneous effect on stock prices. And the most dominant influential variable is earnings per share. Keywords:  Current Ratio, Debt to Equity Ratio, Return On Equity, Total Asset Turnover, Earning Per Share, Price to Book Value, and Stock Price.  

Pengaruh Rasio Hutang terhadap Ekuitas, Rasio Saat Ini, Rasio Cepat, Peralihan Aset dan Pengembalian Aset terhadap Pertumbuhan Laba pada Perusahaan Manufaktur Sektor Industri Dasar Kimia

2021 ◽  
Vol 1 (1) ◽  
pp. 27-37
Author(s):  
Mayang Puspitasari ◽  
◽  
Muhammad Nuur Farid Thoha ◽  
Keyword(s):  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Selection Criterion ◽  
Sampling Technique ◽  
Total Asset ◽  
Manufacturing Companies ◽  
Current Ratio ◽  
Asset Turnover ◽  
The Impact ◽  
Profit Growth

Abstract Purpose: This study aimed to ascertain the impact of debt-to-equity ratio, current ratio, quick ratio, total asset turnover, and return on assets on profit growth in basic industrial and chemical manufacturing companies listed on the Indonesian Stock Exchange from 2013 to 2017. Research Methodology: The population of this study consists of 69 firms, 52 of which passed the sample selection criterion using a purposive sampling technique. The data sources for this study are the financial statements of the companies sampled via www.idx.co.id. This study employs multiple linear regression analysis and is conducted using the SPSS software version 20. (Statistical Product and Service Solutions). Results: The results of this study indicate that ROA has an impact on profit growth, while the current ratio, quick ratio, total asset turnover, and debt to equity ratios do not.

PENGARUH RETURN ON EQUITY (ROE), DEBT TO EQUITY RATIO (DER) DAN TOTAL ASSET TURNOVER (TATO) TERDAHAP RETURN SAHAM PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BEI

2021 ◽  
Vol 5 (1) ◽  
Author(s):  
Siska Audina Bambang Siswanto
Keyword(s):  
Stock Returns ◽  
Secondary Data ◽  
Sampling Technique ◽  
Total Asset ◽  
Coefficient Of Determination ◽  
Manufacturing Companies ◽  
Return On Equity ◽  
Insignificant Effect ◽  
Asset Turnover ◽  
Equity Ratio

This study was conducted to examine the effect of Return on Equity, Debt to Equity Ratio and Total Asset Turnover on stock returns in manufacturing companies listed on the IDX for the 2014-2018 period. The population in this study were 143 manufacturing companies for the 2014-2018 period. The sampling method used was purposive sampling technique and the selected sample met the criteria of 40 companies so that the data used was 200. This study used secondary data and the analysis method used was the classical assumption test, multiple linear regression, t test, f test and coefficient of determination. . Based on the results of data analysis, it can be concluded that the ROE variable has a positive and significant effect on stock returns, the DER variable has a positive and insignificant effect on stock returns, the TATO variable has a positive and insignificant effect on stock returns. There is a significant influence of the ROE, DER and TATO variables simultaneously on Stock Return.

A quantile regression approach to evaluate the relative impact of global and local factors on the MENA stock markets

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Slah Bahloul ◽  
Nawel Ben Amor
Keyword(s):  
Stock Market ◽  
Quantile Regression ◽  
Stock Returns ◽  
Stock Markets ◽  
Financial Integration ◽  
Ordinary Least Squares ◽  
Market Returns ◽  
Stock Market Returns ◽  
Content Type ◽  
The Impact

PurposeThis paper investigates the relative importance of local macroeconomic and global factors in the explanation of twelve MENA (Middle East and North Africa) stock market returns across the different quantiles in order to determine their degree of international financial integration.Design/methodology/approachThe authors use both ordinary least squares and quantile regressions from January 2007 to January 2018. Quantile regression permits to know how the effects of explanatory variables vary across the different states of the market.FindingsThe results of this paper indicate that the impact of local macroeconomic and global factors differs across the quantiles and markets. Generally, there are wide ranges in degree of international integration and most of MENA stock markets appear to be weakly integrated. This reveals that the portfolio diversification within the stock markets in this region is still beneficial.Originality/valueThis paper is original for two reasons. First, it emphasizes, over a fairly long period, the impact of a large number of macroeconomic and global variables on the MENA stock market returns. Second, it examines if the relative effects of these factors on MENA stock returns vary or not across the market states and MENA countries.

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