Determinants of Stock Price Volatility: An Empirical Investigation of Firms in Textile Sector of Pakistan
Determinants of Stock Price Volatility: An Empirical Investigation of Firms in Textile Sector of Pakistan

Summary/Abstract: The study examines the effect of return on equity (REO), sales growth (SG), debt to equity ratio (DER), Cash Ratio (CR) company size (CS) and Dividend pay-out ratio (DPR) on stock price volatility (SPV) by analyzing the financial data of 134 firms of textile sector of Pakistan. The study based on Pakistani textile sector which is one of the major pillars of the economy. It contributes 8.5% in GDP of Pakistan and employees more than 45% of labour. The data was collected from firms listed in Pakistan Stock Exchange (PSX) for the years of 2008 to 2019. The data was analysed through E-views and the results show that Return on equity (ROE) and sales growth (SG) has positive significant relation with stock price volatility (SPV). There is positive relation between debt-to-equity ratio (DER) and stock price volatility (SPV). The study further shows that company size (CS) and cash ratio (CR) has negative significant relation. The study highlights the factors that bring volatility in stock price and the principal variables to keep in mind while making investment decision.

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