An Investigation and Evaluation of Stock Pricing Models in Tehran Stock Exchange (TSE)

Authors

1 Associate Professor of Accounting, Shahid Bahonar university of Kerman, Kerman, Iran.

2 M.A. of Accounting, Shahid Bahonar University of Kerman, Kerman, Iran.

Abstract

It is felt to need wide investigation about financial and accounting subjects with developing of the privatization and tendency to exchange shares and increasing of the number of share holders. One of the important subjects is to studing about stock pricing modeles and determination of the variables that affect stock price. In recent decates, researchers have tried to find these variables and offer a model to pricing stocks based on it. This study empirically tests a number of stock pricing models that are based on fundamental variables in Tehran Stock Exchange. Using a cross-section of Tehran Stock Exchange listed firms over the 2002-2008, the study documents high explanatory power for stock pricing models based on the following models: Edwards-Bell-Ohlson (EBO), Economic Value Added (EVA), Price-to-Earnings (P/E), Price-to-Sales (P/S) and Price-to-Book value (P/B). Our finding indicated that P/B model has the highest adjusted coefficient of determination and hence is the best model of stock pricing among models of this research.

Keywords

References

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History

  • Receive Date: 10 April 2010
  • Revise Date: 02 May 2010
  • Accept Date: 07 June 2010

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