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Understanding undervalued vs. non-undervalued stocks from the firm characteristics perspective: the case of Malaysia

Author

Listed:
  • Irene Wei Kiong Ting
  • Noor Azlinna Azizan
  • Premjit Singh
  • Qian Long Kweh

Abstract

From the perspective of firm characteristics, this study explores the determinants of the performance of undervalued stocks compared with that of non-undervalued stocks over a ten-year period (2006-2015). The performance of these stocks is significantly and positively affected by operating cash flow, and firm performance decreases along with increasing debt. In this case, both undervalued and non-undervalued tasks should monitor the level of their leverage. These results provide a novel understanding of undervalued stocks and help investors identify firm characteristics that can improve stock performance. These results may also guide firm managers in aligning undervalued or non-undervalued stocks with the characteristics of their firms. The new perspectives offered by this study on the other determinants of stock performance can also benefit future scholars in this field.

Suggested Citation

  • Irene Wei Kiong Ting & Noor Azlinna Azizan & Premjit Singh & Qian Long Kweh, 2024. "Understanding undervalued vs. non-undervalued stocks from the firm characteristics perspective: the case of Malaysia," International Journal of Business Excellence, Inderscience Enterprises Ltd, vol. 33(3), pages 372-392.
    • Handle: RePEc:ids:ijbexc:v:33:y:2024:i:3:p:372-392
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