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An Empirical Study of the Relationship Between Earnings per Share, Net Income and Stock Price |
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PP: 673-679 |
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doi:10.18576/amis/160502
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Author(s) |
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A. T. Gharaibeh,
M. H. Saleh,
O. Jawabreh,
B. J. A. Ali,
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Abstract |
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| In this paper, we investigate the impact of earnings per share and net income on stock prices. The sample consists of six manufacturing businesses listed on the Jordanian stock exchange (JSE) between 2011 and 2021. Using panel data, a model was developed to assess the stock price drivers of manufacturing businesses. To determine if a link exists between the dependent variable and the independent variable, a model utility test is used in regression. P-value hypothesis testing is often employed in model utility testing. R2 coefficient of determination is used in this papers model utility test approach. A simple linear regression model with significance levels = 0.01, 0.025, and 0.05 is used to assess the usefulness of the model utility test in determining the significance of the regression model. It is shown that findings revealed a negative association between net income and share price, but a positive relationship between Earnings per Share (EPS) and stock price. Investors may utilize the studys findings to make investment decisions by paying attention to the companys financial parameters, such as earnings per share and net income. This study recommends that investors should be aware of the factors that influence stock prices prior to making investing decisions if they want to ensure that they will receive a reasonable return.
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