DETERMINANTS OF LISTED INSURANCE COMPANIES IN NEPAL STOCK EXCHANGE

Abstract

This study attempt to analyze the fundamental values and their effect on stock price of listed insurance companies in Nepal stock exchange. The investigation and evaluation of the Fundamental values and their effect on stock price of listed insurance companies of six insurance firms was the study's main objective. Data for this study was gathered during a ten-year period, from 2013–14 to 2022–23, from Nepal Life insurance Co. Limited (NELIC), Life insurance Co. Nepal (LIC), Surya Life insurance Co. Limited(SLIC), Nepal insurance Co. Limited (NICL), Prabhu insurance Co. Limited (PICL) and Shikhar insurance Co. Limited (SICL). Descriptive and casual comparative research has been conducted to reach the study's objectives. To meet the desired objectives, the researcher identified the correlation of the quantitative factors DPR, EPS, PE and size with MPS by correlation and regression analysis of secondary data and also tests the significance of such relationship at 95% level of significance. From the secondary data analysis, it is known that there is not consistent performance in the relationship of MPS with DPR, EPS, P/E , size and D/Y for the six sampled insurance companies. The result revealed that, the correlation coefficients of MPS with independent variables (DPR, EPS, PE and D/Y) are significantly positive at 5% level of significance. So, these all factors (DPR, EPS, PE and D/Y) are the determinants of the market price changes. It means P/E, DPS and EPS affects the MPS positively. Theoretically when earnings, dividend and PE increase, the market price of share also increases and vice versa. EPS, PE and DPR are the major determinants/fundamental values (impacting factors) of MPS.