Analysis on the correlation between stock return and accounting performance measures to predict the most valuable-relevant metric in all publicly-listed companies in the Philippines

• Main Authors: Baldon, Marian L., Ching, Jenneca Shayenneh G., Ramos, Alyana Celina B., Vasquez, Isabella Bianca D.
• Format: text
• Language: English
• Published: Animo Repository 2015
• Subjects: Price-earnings ratio > Philippines
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/9731
• Institution: De La Salle University

The purpose of this study is to determine the most value-relevant metric that reflects stock return by analyzing the relationship between the two types of financial performance measures, specifically market performance and accounting performance measures, using all publicly-listed companies in the Philippines as sample population. In this connection, all available data of publicly-listed companies in the Philippines from Osiris were used in this study. The researchers performed descriptive analysis, Pearson correlation analysis, and hierarchical multiple regression in order to achieve the objects of the study. It was concluded that return on sales (ROS), return on equity (ROE) and net profit margin (NPM) were the significant predictors of stock return. Furthermore, researchers revealed that ROS and ROE had both positive significant relationships with stock returns, while NPM had a negative significant relationships with stock returns. Among the top three value-relevant predictors of stock returns, the researchers came to the conclusion that NPM was the most value-relevant metric. However, it had inverse relationship with stock returns such that whenever NPM increases, stock return decreases. In summary, the research contains vital information which both management and investors can use in making proper business decision. Thus, it is recommended that management should consider the most value-relevant metrics to assess and improve their performance in order to attract investors.