Substantiation of Investment Decisions by Studies of Association between Traditional Financial Indicators and Stock Exchange Ratios
Author:
Mihai CARP, Ph. D.; Univ. Prof. Marilena MIRONIUC, Ph. D.
JEL:
C58, G11, G32, M41, M42
DOI:
Keywords:
financial indicators, stock exchange performance, financial and economic information, correlation, regression
Abstract:
The capital market investors bases their decision to purchase the securities of companies using, in addition to the analysis of economic, social and political factors that could affect the price of securities, a financial and economic diagnosis on the health and prospects of economic entity growth. In the specialized studies, there are approaches according to which can not be claimed for certain that the performance of a company, measured by traditional financial indicators, represent a guarantee for a future stock exchange performance. In this regard, identifying the existence and estimation of intensity to the link established between ratios of stock exchange performance, as part of the investment decision, and financial indicators, which characterize the economic profile of the enterprise, serve to reflect the extent to which such analyses are sufficient to document the potential investors, owners of capital. The present study proposes the development of econometric models for explaining and quantifying the degree of influence exercised by financial indicators on stock exchange ratios. The analysis is conducted on a sample extracted from the population represented by companies listed on the Bucharest Stock Exchange. Testing of working hypothesis was facilitated by the use of methods such as: correlation analysis, multiple regression analysis, ratios technique. The processing of data under study was realized using the statistical software SPSS 19.00.