Sherif Elbarrad
Accounting Thought, Vol. 5 (Issue 2), 2001, 173-228.
Publication year: 2001


This research aims to  study if there is a correlation between the financial indicators and changes in stock prices for different business sectors, then to study if the set of indicators which had a correlation with the changes in stock prices for each sector is significantly different from those of the other sectors.

Quarterly financial statements over a period of 5 year for 21 companies are used to  represent the sample of this study. The companies are distributed among three sectors; Industrial; Construction; and Commercial. Sixty four ratios representing the variables of such study are calculated using the sample companies financial statements. A correlation between the variables and stock price on the financial statement date is studied.  Then a step-regression model is developed for each sector to show the most effective indicators on the stock price. The indicators of the three sectors are compared together, and the results showed that there are some indicators that are significantly correlated with the stock price and are common across the three sectors. Other indicators are common only within two sectors. There are no financial indicators which effect the stock price, which are common between the three sectors under study. This indicates that the business nature affects the financial indicators that affect the stock prices. The research also showed that non-financial data are important and has an effect on the stock prices.