Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/222184
Title: DETERMINANTS OF SHARE PRICES OF SELECTED CONSTRUCTION FIRMS: PANEL DATA REGRESSION APPROACH
Authors: CHUA JIA LIN
Keywords: Building
PFM
Project and Facilities Management
Tan Chee Keong Willie
2015/2016 PFM
Issue Date: 13-Jul-2016
Citation: CHUA JIA LIN (2016-07-13). DETERMINANTS OF SHARE PRICES OF SELECTED CONSTRUCTION FIRMS: PANEL DATA REGRESSION APPROACH. ScholarBank@NUS Repository.
Abstract: Construction firms are often plagued with cash flow problems, contributing to the high rate of insolvencies in the industry. Share prices of publicly listed construction firms reflect their performance and financial health, thereby affecting their ability to raise funding. With that in mind, the purpose of this study is to examine the determinants of share prices of construction firms. Current studies on share prices have based their research on simple financial ratios or other regression techniques. This study employs a different approach that utilizes panel data regression because of its ability to measure multi-dimensional data over multiple time periods for the same entity. The nine determinants chosen for this paper are as follows: profitability ratio, financial autonomy ratio, liquidity ratio, operating cash flow ratio, debt to asset ratio, debt to equity ratio, property price index, construction output and interest rate of banks and finance companies. A sample of five publicly listed construction companies are selected on the basis that construction is their core business and that they have been publicly listed for at least seven years – a period long enough to capture the effects. Therefore, the designated timeframe has a total number of 25 quarterly data, from Q4-2008 to Q4-2014. The findings of this paper demonstrate that the three variables; liquidity ratio, debt to equity ratio and construction output, have a significantly positive correlation to share prices. As for the debt to asset ratio, it has a negative significant relationship with share prices. These results are expected since these ratios measure a company’s financial health, capital financial structure and overall financial strength, as well as the level of activities in the construction industry. On the other hand, there is no relationship found between profitability ratio, financial autonomy ratio, operating cash flow ratio, property price index, and share prices. Interest rates of banks and finance companies were not considered for panel data regression due to the lack of fluctuations to enable comparisons.
URI: https://scholarbank.nus.edu.sg/handle/10635/222184
Appears in Collections:Bachelor's Theses

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