Home Part 1 FINANCIAL RATIOS AND STOCK PRICES ON DEVELOPED CAPITAL MARKETS

 

FINANCIAL RATIOS AND STOCK PRICES ON DEVELOPED CAPITAL MARKETS

Professor BOGDAN DIMA PhD
Faculty of Economics and Business Administration, West University of Timișoara, E-mail:
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Lecturer ŞTEFANA MARIA DIMA PhD
Faculty of Economics, “Vasile Goldiş” Western University of Arad,
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OTILIA ŞĂRĂMĂT
PhD, E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
CARMEN ANGYAL
PhD, E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Abstract:
This study empirically tests for the relevance of a set of financial ratios designed to capture issuers’ financial performance for the dynamics of stock prices, on a dataset of quarterly values for 495 trading quotes from major European capital markets as well as from S&P 500 market covering a time span between 2003/1 and 2011/1. The research hypothesis is that financial ratios reflecting issuers’ financial health matter in the selection of portfolios’ structure. We tested this hypothesis in a GMM methodological framework and found that such relationship holds on long run, even if there appears to be some differences in the reactions of European and United States’ stocks to financial information.
Keywords: financial ratios; financial assets’ valuation; European capital markets; S&P 500 market.
JEL Classification: G11; G12; G15

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