Performance Based Measures on Stock Returns

The inconclusive works on which performance measure is more superior and the lack of studies in validating the performance measures through sector-wide coverage and broad time-framed provided a legitimate reason for this study to pursue an understanding of the effects of economic climate (growth, recession and recover) on stock return in the Malaysian (emerging market) context. The main contention of this study is to examine the effects of EVA, ROA, ROE and EPS on stock return for companies listed on the Main Board of Bursa Malaysia (formally known as Kuala Lumpur Stock Exchange) for the year 1990-2000.The 2-step and 4-step hierachical regression models with firm size, firm risk and sector controlled revealed that ROA, ROE, and EPS have significant influence on stock returns. EVA was found to be the worst performer in predicting stock returns regardless of in which economic period it is investigated. As such, this study did not find a strong ground for the assertion by Stewart, let alone championing the claim of Stewart in abandoning earnings per share and forget (about) ROA, ROE and ROI .

Autorentext

Senior Lecturer at Tunku Abdul Rahman College, School of Business Studies. Her main interests are in behavioral finance, asset valuation and risk management. She worked as a General Manager (Finance) in a subsidiary of a listed utility company in Malaysia before joining the academic world.