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Determinants of the Systematic Risk of the Cement Industry of Bangladesh

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  • Avijit Mallik
  • Tanveer Ahmed Khan
  • Nazirul Azam Biswas

Abstract

This study looks at how a cement manufacturing company's financial features affect the systemic risk or beta. We collected data regarding the financial performance of all the publicly traded cement manufacturing companies for a six-year period (from 2016 to 2021) to identify the determinants of systematic risk or beta. We used linear regression with panel corrected standard error model. The study evaluated seven performance measures, profitability (Return on Asset), solvency (Equity Ratio), inventory efficiency (Inventory Turnover), asset efficiency (Asset Turnover), liquidity (Cash Ratio), company’s growth (Earnings before Interest and Tax growth) and company’s cash generation capability (Operating Cash Flow to Sales) to see whether these factors had any statistically significant relationship with systematic risk or beta. The study found that solvency, asset efficiency, liquidity are statistically significant determinants of beta at five percent significance level. The Inventory Turnover is statistically significant determinant of beta at ten percent significance level. None of the other variables had any statistically significant relationship with beta.

Suggested Citation

  • Avijit Mallik & Tanveer Ahmed Khan & Nazirul Azam Biswas, 2022. "Determinants of the Systematic Risk of the Cement Industry of Bangladesh," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 14(10), pages 1-1, October.
    • Handle: RePEc:ibn:ijefaa:v:14:y:2022:i:10:p:1
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    References listed on IDEAS

    as
    1. Abell, John D. & Krueger, Thomas M., 1989. "Macroeconomic influences on beta," Journal of Economics and Business, Elsevier, vol. 41(2), pages 185-193, May.
    2. Chen, Nai-Fu & Roll, Richard & Ross, Stephen A, 1986. "Economic Forces and the Stock Market," The Journal of Business, University of Chicago Press, vol. 59(3), pages 383-403, July.
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    Cited by:

    1. Hao Dong & Yingrong Zheng & Na Li, 2023. "Analysis of Systemic Risk Scenarios and Stabilization Effect of Monetary Policy under the COVID-19 Shock and Pharmaceutical Economic Recession," Sustainability, MDPI, vol. 15(1), pages 1-32, January.

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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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