Does Profitability Cause the Changes in Stock Prices? Evidence from the Turkish Banking Stocks
Does Profitability Cause the Changes in Stock Prices? Evidence from the Turkish Banking Stocks
Author(s): Hatice Elanur Kaplan, Şenol Babuscu, Adalet HazarSubject(s): Business Economy / Management, Financial Markets, Accounting - Business Administration
Published by: Acadlore Publishing Services Limited
Keywords: Banking stocks; Stock returns; Return on assets; Return on equity; Earnings per share;
Summary/Abstract: Stock prices reflect the future for investors. Profit and profitability ratios are considered as the data of the enterprises’ past. Accordingly, whether investors make investments decisions regarding profit and profitability factors and they cause the changes in stock prices are crucial issues to be examined. The aim of the study is to investigate the causality between several profitability factors and the change in the prices of banking stocks by performing the Emirmahmutoğlu & Köse (2011) bootstrap causality test on the quarterly data obtained from six commercial banks in Turkey over the period 2010: Q1 – 2020: Q4. The findings of the study reveal that especially the earnings per share figures account for the changes in the stock price of the banks. Nonetheless, such a causal relationship can be detected for neither return on assets nor return on equity.
Journal: The Journal of Corporate Governance, Insurance, and Risk Management (JCGIRM)
- Issue Year: 9/2022
- Issue No: 2
- Page Range: 348-354
- Page Count: 7
- Language: English