Economics at your fingertips  


Afm Ahsan

Journal of Academic Research in Economics, 2013, vol. 5, issue 1 (June), 5-20

Abstract: Return on equity (ROE) is a closely watched financial ratio among equity investors. It is a strong measure of how well the management of a firm creates value for its shareholders. Different financial ratios, for instance, Price-to-Book, Price-to-Earnings, Price-to-Sales, Debt-to-Equity, have been used to predict security performance. This study, using ROE to predict portfolio performance, found that investors can create portfolios based on a simple historical financial ratio, i.e., ROE, which will produce positive abnormal return without extensive cumbersome fundamental research. However, portfolios based on higher ROE do not guarantee higher positive abnormal return. This particular strategy could be very cost-effective in the emerging markets where financial data is not readily accessible.

Keywords: ROE; portfolio performance; management; firm; shareholder. (search for similar items in EconPapers)
JEL-codes: G11 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Journal of Academic Research in Economics is currently edited by Claudiu Chiru

More articles in Journal of Academic Research in Economics from Spiru Haret University, Faculty of Accounting and Financial Management Constanta Contact information at EDIRC.
Bibliographic data for series maintained by Claudiu Chiru ().

Page updated 2023-10-02
Handle: RePEc:shc:jaresh:v:5:y:2013:i:1:p:5-20