Determinant of stock price of non-life insurance companies

Abstract

ABSTRACTS This study investigates the determinants of stock price of non-life insurance companies. The study is based on the relationship between the Financial Performance Indicators and Stock Price Behavior of Listed Companies in NEPSE. It examines the relationship between the financial performance indicators (EPS, DPS, BVPS and P/E Ratio) and common stock price (MPS). The main purpose of this study is to investigates, analysis and interpret the Determinants of stock price of non-life insurance companies in Nepal. To meet the purpose of the study descriptive research design was used. Five non-life insurance companies (SICL, NICL, NIL, SAKICO and SPIL) were selected as a sample for the study between the fiscal year 2069/70 to fiscal year 2078/79. Data were obtained from respective insurance company’s annual report, Nepal Stock Exchange and Security Board of Nepal. Data were analyzed through correlation and multiple regression technique by using SPSS version 25. The variables were used Market price per Share (MPS) as dependent variable and Earnings per Share (EPS), Dividend per Share (DPS), Book Value per Share (BVPS), and Price Earnings Ratio (P/E Ratio) as independent variables. The MPS has a significant positive correlation with EPS, DPS and P/E ratio. The findings of the study also show that coefficients for EPS and P/E Ratio are all significant at p<0.01 level, suggesting that they are important predictors of MPS. Finally, the analysis of Nepalese stock market, researcher recommends that, investors should analyze all the aspects and factors that may affect the price of share before investing in any non-life insurance companies. Also, government should formulate and implement a strict rules and regulations for the further development of stock market. Governments need to make mechanism to take immediate action against insider trading. As a result, Nepalese capital market could be more competitive. Keywords: Stock Price, Insurance companies, NEPSE, Financial Performance