Technology Industry on Financial Ratios and Stock Returns

Pinradee Petcharabul¹, Suppanunta Romprasert^2
(1. QAD (Thailand) Co., Ltd. 50/699 Maungthongthani, Chaengwattana Rd. Pakkred Nonthaburi 11120, Thailand;
2. Assumption University Hau Mark Campus Ramkhumheang Rd. Bangkok 10240, Thailand)

Abstract: The objective of this study is determining the significant relationship between financial ratios and stock returns in technology industry of the Stock Exchange of Thailand (SET) from year 1997 to 2011 for 15 years (quarterly data from financial statement). Five financial ratios from each category are used as sample of dependent variables; current ratio from liquidity ratio, debt-to-equity ratio from debt ratio, inventory turnover ratio from asset activity ratio, return on equity ratio from profitability ratio, and price-earnings ratio from market value ratio. Ordinary Least-Squares Regression (OLS estimate) to test the relationship between financial ratios and stock returns and found that only ROE and PE have a significant relationship with stock returns. In conclusion, from previous studies and this study showed that different countries and different methodology in testing the relationship causes different results.

Key words: financial ratios; stock returns; technology industry

JEL codes: G10, G11, L00