Acta Univ. Agric. Silvic. Mendelianae Brun. 2019, 67, 299-307

https://doi.org/10.11118/actaun201967010299
Published online 2019-02-28

The Relationship Between Financial Ratios and the Stock Prices of Selected European Food Companies Listed on Stock Exchanges

Marie Ligocká, Daniel Stavárek

Department of Finance and Accounting, Silesian University, School of Business Administration in Karviná, Univerzitní nám. 1934/3, 733 40 Karviná, Czech Republic

Received July 23, 2018
Accepted November 29, 2018

Stock prices can be influenced by many factors. It is possible to determine two categories of variables that can affect stock prices: macroeconomic and microeconomic variables. The paper is focused on microeconomic factors, specially financial ratios that reflect business activities of the companies. According to the study of Drummen and Zimmermann (1992) the individual characteristics of companies affect up to 50 % of stock prices. The object of this paper is to examine the relationship between selected financial ratios and the stock prices of food companies listed on selected European Stock Exchanges. Time series on annual frequency are used to examine the relationship between stock prices of selected companies and financial ratios with using the Generalized Method of Moments (GMM). Based on previous research we expect to find some linkages especially between stock prices and the profitability ratios.

Funding

Publication of this paper was supported by the Student Grant System of Silesian University in Opava within the project “The effect of fundamental factors and corporate governance on stock prices” [nr. 23/2016]. The support is greatly acknowledged.

References

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