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Determinants of telecommunication stock prices

Andros Gregoriou (Brighton Business School, University of Brighton, Brighton, UK)
Jerome Healy (Department of Accounting and Finance, Hull University Business School, Hull,)
Jairaj Gupta (Department of Accounting and Finance, Hull University Business School, Hull, UK)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 14 September 2015

2591

Abstract

Purpose

The purpose of this paper is to analyze the determinants affecting the stock prices of telecommunications firms in both developed and developing countries around the world.

Design/methodology/approach

The empirical analysis is performed using panel data from 160 countries and 45 companies, covering the time period from 2000 to 2011. To identify the significant factors, company level firm-specific financial and non-financial factors have been analyzed that are expected to bear significant impact on price volatility of telecommunications stock.

Findings

The test results reveal that capital expenditure and book value are the most significant factors. Dividends and debt levels only affect prices significantly in specification tests with either time-series or cross-sectional effects, whereas firms’ earnings and numbers of mobile internet subscribers do not contribute to the explanatory power of telecommunication stock price variability.

Practical implications

The study sheds light to the potential investors in evaluating the risk associated with investment in stocks of telecommunications firms and take informed investment decisions.

Originality/value

This is the first study that presents a comprehensive analysis of determinants affecting the stock prices of telecommunications firms in both developed and developing countries around the world.

Keywords

Acknowledgements

JEL Classification —C23, D12, L96, O33

Citation

Gregoriou, A., Healy, J. and Gupta, J. (2015), "Determinants of telecommunication stock prices", Journal of Economic Studies, Vol. 42 No. 4, pp. 534-548. https://doi.org/10.1108/JES-06-2013-0080

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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