THE RELATIONSHIP BETWEEN SHARE PRICE AND FIRM SPECIFIC FACTORS: A STUDY ON THE BANKING SECTOR OF BANGLADESH

Abstract

In this paper, by looking at firm specific factors including book value,
profitability, capital ratio and company size for banking firms in Bangladesh, we
intend to shed light on possible relationships between firm specific factors and
share price in an emerging economy. Our panel data on all public traded bank
stocks from the period 2000 to 2015, adjusted for multicollinearity and possible
heteroskedasticity, suggests that book value, price-to-earnings ratio and
company size have significant relationship with the share price of the concerned
banking firms. The study findings are consistent with those of similar studies
in other emerging economies and add further evidence to existing literature
concerning the relationship between firm specific factors and stock prices in
emerging economy capital markets.