| Summary: | Market capitalization is true measure of a company‟s value. This study aims to
examine the effect of profitability ratio on market capitalization. Thus, the objective
of the study is to know one of the profitability ratios, which can influence the market
capitalization of Malaysian insurance companies. To study market capitalization is
taken as a dependent variable and profitability ratios (Return on Assets, Return on
Equity and Return on Investment) are selected as independent variables. Sample of 9
insurance companies have been taken for the study. The period of the study is five
years from 2011 to 2015. The finding shows that there is significant relationship
between Return on Equity (ROE) and Return on Investment (ROI) toward market
capitalization for the companies operating in the insurance sector in Malaysia. It
indicates that there is an effect of ROE and ROI on Market Capitalization. In respect
of the effect of Return on Assets (ROA) upon Market Capitalization, the result
indicated that there is no effect of ROA on market Capitalization for the companies
operating in the insurance sector in Malaysia.
Keywords: Profitability Ratios, Market Capitalization, Malaysian Insurance
Companies
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