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Target P/E ratio determinants in the Turkish Stock Market: Earning volatility effect

Author

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  • Halil ARSLAN

    (İstanbul Şehir University, Turkey)

  • Yuksel ILTAS

    (Ahi Evran University, Turkey)

  • Temur KAYHAN

    (İstanbul Şehir University, Turkey)

Abstract

This paper investigates that what are the determinants of target PE in the case of Turkish Stock Market. The general outputs: i) Projected dividend yield is the dominant factor on PE. ii) Boosted investments and growing top-line raise PE ratio. iii) PE ratios come down as companies' financial leverage and working capital needs grow. iv) Although stabilizing foreign exchange risks and gross profit margins with the aid of hedge tools and product diversity of the companies decreases the acceleration of profitability, it eventually augments PE ratio. Data from Borsa İstanbul covering 2000-2014 term have been modeled by GMM.

Suggested Citation

  • Halil ARSLAN & Yuksel ILTAS & Temur KAYHAN, 2017. "Target P/E ratio determinants in the Turkish Stock Market: Earning volatility effect," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(613), W), pages 65-74, Winter.
    • Handle: RePEc:agr:journl:v:4(613):y:2017:i:4(613):p:65-74
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    References listed on IDEAS

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    2. Nikbakht, Ehsan & Polat, Celaleddin, 1998. "A global perspective of P/E ratio determinants: The case of ADRs," Global Finance Journal, Elsevier, vol. 9(2), pages 253-267.
    3. Myron J. Gordon & Eli Shapiro, 1956. "Capital Equipment Analysis: The Required Rate of Profit," Management Science, INFORMS, vol. 3(1), pages 102-110, October.
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    Cited by:

    1. Tuğba KAYHAN & Temur KAYHAN & Engin YARBAŞI, 2019. "Profit management in the case of financial distress and global volatile market behaviour: Evidence from Borsa Istanbul Stock Exchange," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(620), A), pages 179-192, Autumn.

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