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Does Fundamental Analysis Predict Stock Returns? Evidence from Non-Financial Companies Listed on KSE

Author

Listed:
  • Nadeem Iqbal
  • Sajid Rahman Khattak
  • Muhammad Arif Khattak

    ("Dimitrie Cantemir" Christian University)

Abstract

Present study aims at investigating whether historical accounting data (fundamental analysis) can predict future stock returns. The paper goal is to show the predictive quality of fundamental analysis and FSCORE in Pakistan. This paper use five signals from five different areas of; profitability ratios, efficiency ratios, liquidity ratios, leverage ratios, and market based ratios for the study. Data were selected for ten year period from 2000 to 2009. The sample of the study consists of all non-financial companies listed on Karachi Stock Exchange having ten years consecutive data are available. For data analysis the study used ordinary least square (OLS). The study found that fundamental analysis cannot predict stock returns in Pakistani listed companies. The study found that FSCORE has insignificant relation with stock returns of Pakistani listed companies.

Suggested Citation

  • Nadeem Iqbal & Sajid Rahman Khattak & Muhammad Arif Khattak, 2013. "Does Fundamental Analysis Predict Stock Returns? Evidence from Non-Financial Companies Listed on KSE," Knowledge Horizons - Economics, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 5(4), pages 182-190, December.
    • Handle: RePEc:khe:journl:v:5:y:2013:i:4:p:182-190
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    References listed on IDEAS

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    Cited by:

    1. Senol Emir & Hasan Dincer & Umit Hacioglu & Serhat Yuksel, 2015. "Comparative Study of Outlier Detection Algorithms via Fundamental Analysis Variables:An Application on Firms Listed in Borsa Istanbul," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 4(4), pages 45-60, October.

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    More about this item

    Keywords

    Karachi Stock Exchange Fundamental Analysis; FSCORE; OLS;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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