Value Relevance and Share Price Dynamics: An Empirical Analysis of Indian Multinational Corporations

Abstract

The share price is one of the major aspects of taking financial decisions by the investors. This study has investigated the impact of value relevance on the share price of Indian multinational companies. In this study, the top 10 multinational corporations (MNCs) have been taken for the analysis of data from the financial year 2018–2019 to 2022–2023. However, share price has been considered a dependent variable, whereas earnings per share (EPS), book value per share (BVPS), price to book value (PB), price to earnings (PE) and assets turnover ratio (ATR) have been considered independent variables. By employing correlation, ordinary least squares (OLS), fixed effect model (FEM), random effect model (REM), Hausman test and the Jarque–Bera test, data have been analysed and significant associations among the given variables have been found. The outcome of the study has revealed that there is a significant impact of value relevance on the share price of the MNCs in India, as the p value derived from the analysis is less than .05. This means that a statistically significant relationship exists between the variables considered in the study.

JEL Codes: G10, M41, Y10

Keywords

Value relevance share price ordinary least square panel data analysis

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