The Effect of the Different Levels of Earnings Multiplier on the Returns and Risks of Investments: An applied Study on the Saudi Stock Market

Authors

  • د. بابكر مبارك عثمان الشيخ

Keywords:

Earnings multiplier, Risk, Return, Saudi Arabia Stock Market

Abstract

This study aims at testing the relation between the different levels of earnings multiplier, and the returns and risks of the stock investment in the environment of Saudi Arabia through constructing portfolios for the different earnings multiplier levels (high and low). The study hypothesis assumes that there is a statistically significant relation between low earnings multiplierportfolioand achieving higher expected rates of returns compared to high multiplierportfolio, and there is a statistically significant relation between low earnings multiplierportfolioand increasing risk degree compared to the high earnings multiplierportfolio. The study data covers the period of 2007- 2016. The study sample consists of (50) companies involved in all the sectors of the Saudi Arabia stock market. The results of the study shows that there is a statistically significant relation between the level of low earnings multiplierportfolio and achieving higher expected returns on investments. Moreover, the study shows that the relation between earnings multiplier and the degree of overall risk is statistically not significant. The study concludes a number of recommendations, one of which is to highly focus while investing in the stock market on stocks that have high earnings multiples.

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Published

2018-02-21

How to Cite

عثمان الشيخ د. ب. م. (2018). The Effect of the Different Levels of Earnings Multiplier on the Returns and Risks of Investments: An applied Study on the Saudi Stock Market. Al-Quds Open University for Administrative & Economic Research & Studies, 2(8). Retrieved from https://journals.qou.edu/index.php/eqtsadia/article/view/1687

Issue

Vol. 2 No. 8 (2017): المجلد الثاني. ع(8) ربيع أول 1439هـ/كانون أول 2017م

Section

الأبحاث

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