FACTOR AFFECTING SHARE PRICE OF INSURANCE COMPANIES IN NEPAL

Abstract

This study investigates the factors influencing the share prices of insurance companies in Nepal, with a primary focus on examining the key determinants of stock prices for selected insurance firms. The objectives include analyzing the relationship between variables such as Earnings Per Share (EPS), Price-to-Earnings (P/E) ratio, Dividends Per Share (DPS), company size, Dividend Yield (D/Y), and Market Price per Share (MPS) for insurance companies listed on the Nepal Stock Exchange (NEPSE). In this analysis, EPS, P/E, DPS, Size, and D/Y serve as independent variables, while MPS is the dependent variable. The study employs mean, standard deviation, correlation, and multiple regression analysis to present the data and draw conclusions. The key findings reveal a negative correlation between MPS and DPS, suggesting an inverse relationship where an increase in the market price per share is associated with a decrease in dividends per share and vice versa. Similarly, a negative correlation between DPS and EPS is observed, indicating that higher dividends might coincide with lower earnings per share. Furthermore, after adjusting for the scale of the variables, a negative relationship between D/Y and MPS is established, while company size exhibits a positive effect on MPS, as indicated by a positive beta coefficient. The study concludes that DPS, EPS, and Size have significant relationships with MPS, while D/Y and the P/E ratio do not significantly influence market prices.