Analysts firmly believe the fact that those investors who view the holistic picture tend to make more profitable decisions . Holistic view entails the combination of many things i.e., a good investment advice, thorough planning and goals centered around making life-changing decisions. Several researchers have accentuated the worth of a coordinated thoughtful style of decision making. In the financial services sector, especially in the quantitative finance field, asset allocation among the available portfolio diversification choices is what dictates the best portfolio return against the risk taken. A holistic financial strategy approach takes in to account the need to diversify the investment properly as per the needs and desires of customers. Research conducted by (Somerville, 2015) shed light on the wealth management practices which could add significant value taking into account holistic financial planning. While results of most of the studies were based on the hypothetical scenarios and not an actual in real investment, the finding enlightened to a great extent the value being derived from financial planning. Study showed that investors who pursue a holistic approach are able to extract additional returns of 1.50% to 3.00% per year. The research also added the point that benefit of 2.25% on yearly basis could affect the portfolio in a positive sense in the long run. Though the overall investment portfolio return was able to extract theoretical return of 6% on the monthly basis, the return level could be elevated significantly by 2.25 percentage points if all factors are taken into consideration which is required in a holistic approach (Somerville, 2015). A study was conducted by (Blanchett & Kaplan, 2013) in which analysts formulated the term ‘Gamma’ to elaborate the reported value added to the portfolio if all the financial techniques are employed. The author defined that choosing Gamma from financial planning acknowledged practices offers a sustainable return than opting for traditional alpha from well-performing mutual funds. The paper highlighted more than 100 financial planning methodologies that could serve as an origin of Gamma. The properly well-planned strategies could soar the return by as much as 1.59% on yearly basis. Holistic approach in finance entails working with the financial adviser could add value to around 3% on yearly basis. In terms of resorting to ideal asset management practices, the returns increased to around 3% on yearly basis as well on various portfolios. It was highlighted in the paper that the value addition would be dependent on clients’ actual scenarios as to the money being injected and fluctuates according to it. The number matters and can reinforce the pivotal step of following a detailed plan and an expert financial mantra. Holistic strategies consist of investment in a low-cost well-diversified portfolio, helps maintain the targeted allocation of financial resources and saves a lot in terms of tax liability. Research also pointed out the fact that holistic financial planning adds the most value by formulating the best value amid bear market lows and evading performance-based decisions during the period when the market reaches the highest point (Blanchett & Kaplan, 2013).Market SignalingSignaling theory was first present by Michael Spence and it still one of the important concept used by financial guru’s. Signaling theory highlighted that only unpredictable changes in the dividend provide the market with clues about random changes in profits which in turn forces the stock price movement (Spence, 1981). This unexpected change in stock return is consistent with efficient market hypotheses as has been stated by many researchers of the empirical finance. The paper accentuated the viewpoint that higher dividend to price ratio would mean higher stock price and lower dividend to price would imply sluggish stock price. The most obvious investment strategy would be to buy when the price is low in comparison to the dividends and sell when its high as then it would pay off (Wang, Ke, Lin, & Huang, 2016). Similar studies were also applied on stocks listed on US stock market but contradictory results were derived by the researchers. Some studies after regressing the stock return on current and future dividend growth rate found that in some cases, variables are strongly connected while in another case just a small relationship was observed (Basse & Reddemann, 2011). Another study was carried out by (Rozaimah, Mahdzan, & Yet, 2016) which considered the impact of dividend policy on stock price movement in the emerging economy of Malaysia. This study primarily focused on the industrial product market. The fundamental reason for choosing the industrial firms was that larger standard deviation was noticed among firms in terms of the dividend payout ratio. Form specific variables were also incorporated in the analysis i.e., income, volatility, size, leverage and growth in assets. Lastly the impact of global financial crisis on the relationship between stock price and dividend policy were also gauged by looking into the pattern of ASEAN-5 countries. The study employed 10-year data for the period 2003 to 2012 with an objective of establishing the relationship between dividend policy and stock price in the Malaysian market. Malaysian market has a distinct attribute being an emerging market in comparison to the developed world. Emerging markets would generally be smaller in size, more prone to volatility and generally has less information efficiency. Firms must have some certain attributes in order for the firm to be taken in sample size i.e., it must continuously be listed on stock exchange for the period under consideration and data must be readily available. Taking into account aforementioned characteristics, a total of 166 out of 238 firms were selected from the industrial sector. Based on the tests performed, it was concluded that there was a significant inverse relationship between dividend payout and stock price and considerable negative relationship between stock price and dividend yield. The results showed that dividend policy is an important predictor of the stock price in the industrial product sector. The higher the dividend pay-out and dividend yield, the lower the uncertainty regarding the stock price volatility will be. Among other variables taken, entity’s income volatility has a significant positive relationship with the stock price volatility which implies that the more stable earning potential of the company is, the less uncertainty regarding its stock price would be. The growth in assets and stock price is deemed as positively related and found to be significant at 10% level. This translates into the fact that the more the opportunities to grow will be, the riskier the stock would be. Financial leverage calculated in terms of the debt to equity ratio is significantly positively related to the stock price but the linkage wasn’t found statistically significant. Various tests conducted to test the hypotheses also reveal that firm size has a considerable negative relationship with the stock price. Large firms by virtue of being more profitable, stable and financially healthy ought to have lower volatility in stock price. The paper also found the linkage during and post crisis period. The results didn’t change at all as the relationship remained to be negative but statistically insignificant so no conclusion could be drawn. Though profitability pattern of the companies was statistically significant and directly proportional to the stock price return in all the three stated periods. Earning pattern was the most determining feature of the stock price during the recession and dividend payout relationship with the stock price was statistically significant before and after the economic crisis. This led to the belief that investors were more concerned about the earning potential of a company instead of dividend policy during the economic crisis as extent to which company is profitable determined the level of stock price. Since crisis brings the worse economic conditions, investors hoped that businesses will remain profitable during the uncertain economic period. Other macroeconomic variables such as revenues generated by exports, currency depreciation and inflation have had more influence stock price amid economic crisis as compared to any firm linked variables(Rozaimah, Mahdzan, & Yet, 2016).Another study was carried out by (Scott & Malcolm, 2008) in which linkage between stock prices and accounting information was studied in much detail with regard to the developed market in Asia specifically outside Japan. The paper considered the result of the empirical studies that evaluated the relationship between share price and accounting variables in the equity market around the world. The firms were chosen from the Disclosure Word scope database and covered the ten-year period 1987 to 1996. Firms were chosen on the availability of the data without taking into account sector it belongs to. The variables employed in the empirical model are market price, equity book value and earnings per share. Values were determined on per share basis instead of taking the full value (Scott & Malcolm, 2008). 2.2 Performance Measurements Variables DefinedBook valueBook value per share is defined as total share capital attributable to the ordinary shareholders at the statement of financial position date divided by the number of ordinary shares at the reporting date (Brigham & Houston, 2012). Earnings per share Could be defined as net income that was reserved for the ordinary shareholders after deducting tax divided by the weighted average number of shares that had been issued during that period (Brigham & Houston, 2012). Dividend per shareThe dividend per share is defined as dividend that had been paid divided by the number of shares in the given year (Brigham & Houston, 2012).InflationInflation is defined as a persistent increase in the price of goods and services in any given country and is measured in terms of average percentage change. The concept of inflation dictates that price of goods increase over time as inflation soars every dollar that you own to buy a small portion of goods and services. There is no single theory for causes of inflation that is generally agreed upon by economists and academics (Maunder, Myers, Wall, & Miller, 2000).Demand pull inflationInflation is caused by an increase in demand for goods and services with a rise in price level. This theory is characterized by the fact that too much money is chasing fewer goods (Maunder, Myers, Wall, & Miller, 2000). Cost push inflationThis inflation is caused when production cost increases. When this happens, companies need to increase price level so as to maintain profit level. Increased cost could increase things such as wages, taxes and greater cost of natural resources (Maunder, Myers, Wall, & Miller, 2000). Monetary inflationThis inflation is caused by an oversupply of money in the economy. The price level of any commodity is determined by supply and demand level (Maunder, Myers, Wall, & Miller, 2000). Return on capital employedCapital employed is the total amount of capital being generated by the company in order to generate profits. It is calculated by summing the shareholder equity and liabilities. Other most simple calculation could be total assets minus current liabilities. This ratio is especially useful when making a comparison about the company in a capital-intensive sector. This is due to the fact that this ratio considers both the equity and liability of the company. Companies with a significant debt could especially benefit from the figure being calculated (Quiry, Dallocchio, Fur, & Salvi, 2005).Return on assetReturn on asset is a financial ratio that depicts the percentage of profit of a company with regard to the overall resources. It is calculated by dividing net income by total assets. The higher the return on asset, the better the management would be. The more capital-intensive business is, the more difficult is to achieve higher return on asset (Ross, Westerfield, & Jordan, 2002). Return on equityReturn on equity ratio is the profitability ratio that measures the ability of the firm to generate profits from money being invested by shareholders. In simple term, it states that portion of the profit being made by company on every dollar of equity spent (Ross, Westerfield, & Jordan, 2002)Debt to equityDebt to equity ratio represents the portion of company’s capital that comes from creditor and investor. Higher the debt to equity ratio is, the more beneficial company would be. Creditors view debt to equity as being risky as it shows that investors haven’t funded the operations as much as creditors have. This could also mean that investors don’t want to finance the business operations because company has not been performing well (Ross, Westerfield, & Jordan, 2002).Price to sales ratioPrice to sales ratio is deemed as relative valuation and varies dramatically with the relative sales figure. Price to sale ratio is most appropriate to evaluate when valuing most types of stock. But this should not be the only metric being used by the company. Lower profitability and higher sales indicate that company has not been performing well (Ross, Westerfield, & Jordan, 2002).2.3 Weighing stock price as a mean of accounting informationFinancial statements compile by corporate managers consist of different performance measures for potential investors to make a decision (Salvaiy, 1997). Market reaction across different accounting items displayed on financial statements is different depending on what type of information is required which elevates the importance of one item over another (Salvaiy, 1997). (Habib, 2010) highlighted the importance of relevant accounting items with regard to an Australian market. Results showed that earnings before interest and taxes were considered the most vital item that investors were more interested in. In terms of a small and medium-sized firm, total revenue was the measure on which investors based their decisions while for a large organization, operating cash flows were more important. The paper also shed light on the importance or incremental revenue in predicting stock return a given sample period. Though the combination of income and revenue was considered more pivotal during the time when the study was conducted. However, this was regarded as true only for smaller firms. Further analysis also concluded that combination of revenue and income coefficients were statistically significant during the time when the firm was growing, while both earning variables were deemed significant during the maturity stage. The results of the study will be of practical importance to the investors who could make informed decisions. The study also elaborated that while making equity decisions, investors take into account firm’s fundamentals listed on the financial statements. Though which of the accounting data provides a relevant information with regard to the equity valuation is yet to be explored (Habib, 2010).A survey was conducted among the CFO by (Graham, Harvey, & Rajgopal, 2005) which showed that earning per share is the key factor on which market mainly focuses. This is mainly due to the reason that investors deem the cost of extracting an information which is also a crucial aspect as well. Though contrary to the survey results, this paper highlighted that firm-specific aspects are also considered by investors in weighing stock price.
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