The Impact of Financial Indicators towards Stock Returns of Finance Companies Listed on Bursa Malaysia

Abstract

This research was conducted to examine the relationship between financial indicators which are Earning per Share growth (EPS), Return on Equity growth (ROE) and Dividend per Share growth (DPS) against stock returns of finance companies. The targeted population consists of 31 out of 32 finance companies listed on Bursa Malaysia. Financial indicators and stock returns data are collected within the period from year 2011 to 2016. The data were analyzed by Pearson Correlation method through SPSS software. The finding of the research indicates that there are 5 finance companies show a significant relationship between EPS growth and stock returns, followed by 5 finance companies show a significant relationship between ROE growth and stock return. While 6 finance companies show a significant relationship between DPS growth and stock returns. As a conclusion, even though only minority of public listed finance companies shows a significant relationship between financial indicators and stock returns. However, there are still about half of the finance companies showing strong correlation above 0.5 between financial indicators and stock returns. This has shown that financial indicators still having a certain degree of explanatory power towards stock returns.