Relationship between Price-Earning Ratios and Expected Return of Common Stocks: The Case of Malaysia

Jabatan Kewangan Fakulti Pengurusan Perniagaan Universiti Kebangsaan Malaysia 43600 UKM Bangi Selangor D.E.


Jabatan Kewangan Fakulti Pengurusan Perniagaan Universiti Kebangsaan Malaysia 43600 UKM Bangi Selangor D.E.


Abstract

This paper investigates the relationship between P/E ratio of a stock and its expected return. Spearman rank correlation, a nonparametric test, was used to test this relationship. This study found significant relationship between the two for the entire period 1980 to 1989 and for the sub-period 1980 to1984, which suggest that the market for Malaysia stocks is not efficient in the semi-strong form of the efficient market hypothesis (EMH). However, for the sub-period 1985 to 1989, the relationship is not significant.

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Citation

Ibrahim, I., & Yong, O. (1991). Relationship between Price-Earning Ratios and Expected Return of Common Stocks: The Case of Malaysia. Jurnal Pengurusan, 10, 95–103.

@article{ibrahim1991relationship,
  title={Relationship between Price-Earning Ratios and Expected Return of Common Stocks: The Case of Malaysia},
  author={Ibrahim, Ismail and Yong, Othman},
  journal={Jurnal Pengurusan},
 

volume={10},
  number={},
  pages={95—103},
  year={1991},
  doi={},
  publisher={Penerbit UKM},
}

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10 (1991) 95 – 103

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