The Relationship Between Share Prices and DUPONT Model Components: Evidence from Mexican Stock Market
This article presents the possible association between the three components (profit generation, asset efficiency and financial leverage) of the DUPONT ratio and share prices. The generalized method of moments (GMM) estimation was used with a sample of 23 companies traded on the Mexican stock exchang...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Instituto Mexicano de Ejecutivos de Finanzas
2021-09-01
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| Series: | Revista Mexicana de Economía y Finanzas Nueva Época REMEF |
| Subjects: | |
| Online Access: | https://www.remef.org.mx/index.php/remef/article/view/550 |
| _version_ | 1811194716098658304 |
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| author | Luis Manuel Tovar Rocha Julio Téllez Pérez Gabriel Alberto Agudelo Torres |
| author_facet | Luis Manuel Tovar Rocha Julio Téllez Pérez Gabriel Alberto Agudelo Torres |
| author_sort | Luis Manuel Tovar Rocha |
| collection | DOAJ |
| description | This article presents the possible association between the three components (profit generation, asset efficiency and financial leverage) of the DUPONT ratio and share prices. The generalized method of moments (GMM) estimation was used with a sample of 23 companies traded on the Mexican stock exchange between 2008 and 2016, considering a period of three days before and three days after the presentation of the quarterly results. It is noted that the generation of profit and efficiency are the components of the DUPONT model that are strongly associated with stock prices, while the leverage effect is the component with the least impact. This empirical work is intended to help understand the relationship between accounting information and stock prices. The study identifies variables that influence decision-making and does not seek to be a predictive model of the value of actions in the future. This research differs from previous studies because it considers the volatility index (VIMEX) as a control variable. |
| first_indexed | 2024-04-12T00:32:29Z |
| format | Article |
| id | doaj.art-cba4bc7d812f49439dfbde07e274a74e |
| institution | Directory Open Access Journal |
| issn | 2448-6795 |
| language | English |
| last_indexed | 2024-04-12T00:32:29Z |
| publishDate | 2021-09-01 |
| publisher | Instituto Mexicano de Ejecutivos de Finanzas |
| record_format | Article |
| series | Revista Mexicana de Economía y Finanzas Nueva Época REMEF |
| spelling | doaj.art-cba4bc7d812f49439dfbde07e274a74e2022-12-22T03:55:18ZengInstituto Mexicano de Ejecutivos de FinanzasRevista Mexicana de Economía y Finanzas Nueva Época REMEF2448-67952021-09-01171e550e55010.21919/remef.v17i1.550427The Relationship Between Share Prices and DUPONT Model Components: Evidence from Mexican Stock MarketLuis Manuel Tovar Rocha0Julio Téllez Pérez1Gabriel Alberto Agudelo Torres2Universidad Anáhuac México NorteUniversidad Anáhuac México NorteInstituto Tecnológico Metropolitano MedellínThis article presents the possible association between the three components (profit generation, asset efficiency and financial leverage) of the DUPONT ratio and share prices. The generalized method of moments (GMM) estimation was used with a sample of 23 companies traded on the Mexican stock exchange between 2008 and 2016, considering a period of three days before and three days after the presentation of the quarterly results. It is noted that the generation of profit and efficiency are the components of the DUPONT model that are strongly associated with stock prices, while the leverage effect is the component with the least impact. This empirical work is intended to help understand the relationship between accounting information and stock prices. The study identifies variables that influence decision-making and does not seek to be a predictive model of the value of actions in the future. This research differs from previous studies because it considers the volatility index (VIMEX) as a control variable.https://www.remef.org.mx/index.php/remef/article/view/550valuation, financial analysis, multiples, financial ratios, volatility. |
| spellingShingle | Luis Manuel Tovar Rocha Julio Téllez Pérez Gabriel Alberto Agudelo Torres The Relationship Between Share Prices and DUPONT Model Components: Evidence from Mexican Stock Market Revista Mexicana de Economía y Finanzas Nueva Época REMEF valuation, financial analysis, multiples, financial ratios, volatility. |
| title | The Relationship Between Share Prices and DUPONT Model Components: Evidence from Mexican Stock Market |
| title_full | The Relationship Between Share Prices and DUPONT Model Components: Evidence from Mexican Stock Market |
| title_fullStr | The Relationship Between Share Prices and DUPONT Model Components: Evidence from Mexican Stock Market |
| title_full_unstemmed | The Relationship Between Share Prices and DUPONT Model Components: Evidence from Mexican Stock Market |
| title_short | The Relationship Between Share Prices and DUPONT Model Components: Evidence from Mexican Stock Market |
| title_sort | relationship between share prices and dupont model components evidence from mexican stock market |
| topic | valuation, financial analysis, multiples, financial ratios, volatility. |
| url | https://www.remef.org.mx/index.php/remef/article/view/550 |
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