Determining the value relevance of financial instruments on the stock performance of publicly-listed, non-financial companies in the Philippines for the years 2011-2015

• Main Authors: Cortez, Aina Rae L., David, Kyle Gabriel C., Martinez, Jaye Marie C., Origeneza, Karl Geo D.
• Format: text
• Language: English
• Published: Animo Repository 2016
• Subjects: Financial instruments > Philippines; Stocks > Philippines
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/7690
• Institution: De La Salle University

The importance of financial instruments for non-financial companies is usually overlooked given that the said instruments are not as integral in their day-to-day operations, compared to that of financial companies. The aim of this paper is to determine the value relevance of financial instruments on the stock performance of publicly-listed, non-financial companies operating in the Philippines for the years 2011 to 2015. The data collected involving the accounts of financial instruments were tested by a researcher-modified Ohlson model to show its correlation to stock price, and by the earnings response coefficient model to show its correlation with stock returns. Based on the results of the two models, financial instruments, if measured alongside a profit indicator, do not have a significant impact to stock performance. With the use of the ERC model, the researchers found that, in addition to changes in earnings per share, size also has a significant explanatory power with regard to stock returns. The results have positive contributions in business in that these provide information that could be used by top management to improve the quality of their decisions, regulatory bodies in assessing current valuation systems, and for investors and analysts in maximizing their investment choices.