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Predicting Stock Returns With Financial Ratios: A Discriminant Analysis Application On The Ise 30 Index Stocks

Listed author(s):
  • Bulent Oz
  • Yucel Ayricay
  • Gokturk Kalkan


    (Osmaniye Korkut Ata University
    Kahramanmaras Sutçu Imam University
    Kahramanmaras Sutçu Imam University)

Registered author(s):

    This study aims to identify the factors that help the prediction of the stock returns for ISE 30 listed companies and also help to decide on which stock would be more suitable by using the most suitable model. With this aim, the stock returns are estimated 1 and 2 years earlier by using the financial ratios of years 2006 and 2005. According to the results obtained from a discriminant analysis, which is a multi-variate statistical analysis, i) the operating turnover and leverage variables of the 1 year model, ii) operations turnover, leverage and liquidity variables of the 2 year model are found to be statistically significant. When the percentages of correct classification are compared 2 year model(% 91.7) turns out to be superior to the 1 year model (%75).

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    Article provided by Anadolu University in its journal Anadolu University Journal of Social Sciences.

    Volume (Year): 11 (2011)
    Issue (Month): 3 (September)
    Pages: 51-64

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    Handle: RePEc:and:journl:v:11:y:2011:i:3:p:51-64
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