Abstract
The main objective of this paper is to find the impact of
inflation, interest rate, growth and profitability on stock
returns. The data for profitability and growth have been
collected from 5 years financial statements of 30 companies
listed on KSE, covering 15 different sectors, whereas data for
interest rate and inflation have been collected from State
Bank of Pakistan and Consumer Price Index, for a period of
5 years i.e. 2008-2012. To test the hypotheses empirically,
descriptive statistics and multiple linear regression
techniques are used. Results show 54.8% correlation between
predictor and predicted variables whereas 30% variation in
predicted variable is explained by four significant predictor
variables namely profitability, inflation, interest rate and
growth. Moreover, Inflation has a statistically significant
negative impact on stock returns whereas profitability,
growth and interest rate have statistically significant positive
impact on stock returns. The findings of this study are
consistent with previous studies on the same topic, conducted
in other markets. This study will be helpful for individual as
well as institutional investors to estimate the expected returns
of stocks based on the above mentioned variables before
investing, thus enabling them to make better investment
decisions.
Rashid Mehmood Khan, Dr. Faid Gul , Ehtisham Ali. (2017) Factors Influencing Stock Returns in Listed Firms of Karachi Stock Exchange, Paradigms , Vol 11, Issue 2 .
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