Investigating the effect of adjusted DuPont ratio and its components on investor  & quot; s decisions in short and long term

Zanjirdar, M.; Kasbi, P.; Madahi, Z.

Management Science Letters

ISSN 1923-9343 (Online) - ISSN 1923-9335 (Print) Quarterly Publication Volume 4 Issue 3 pp. 591-596 , 2014

Investigating the effect of adjusted DuPont ratio and its components on investor & quot; s decisions in short and long term Pages 591-596 Download PDF

Authors: Majid Zanjirdar, Parvaneh Khaleghi Kasbi, Zahra Madahi

Keywords: Adjusted DuPont analysis, Asset turnover operating, Herding behavior, Profit margin, Return on net operating assets

Abstract: This paper investigates the effect of adjusted DuPont ratio and its components on investors’ decisions in short and long term. The primary objective of this study is to find the effect of adjusted DuPont ratio and its components on herding behavior of investors in one and several year period. Hence, 85 corporations as the member of Tehran stock exchange over the period 2006-2011 are selected. In order to recognize the herding, by market index consideration, the herded B and in order to hypothesis validity SPSS software and multivariable linear regression have been used. As the results of this study indicate, the adjusted DuPont ratio and its components have more effect on investors’ decisions in short term but in long the period, the effect of this ratio on herding investors’ behavior are reduced. Furthermore, from the two components of adjusted DuPont ratio, profit margin has more effect on investor & apos; s decisions.

How to cite this paper

 Zanjirdar, M., Kasbi, P & Madahi, Z. (2014). Investigating the effect of adjusted DuPont ratio and its components on investor  & quot; s decisions in short and long term.Management Science Letters , 4(3), 591-596.

Refrences

Amir, E., Kama, I., & Livnat, J. (2011). Conditional versus unconditional persistence of RNOA components: implications for valuation. Review of Accounting Studies, 16(2), 302-327.

Amir, E., & Kama, I. (2012). Conditional Persistence of Earnings Components and Accounting Anomalies. Available at SSRN 2138810.

Clement, M. B., & Tse, S. Y. (2005). Financial analyst characteristics and herding behavior in forecasting. The Journal of finance, 60(1), 307-341.

Demirer, R., & Kutan, A. M. (2006). Does herding behavior exist in Chinese stock markets?. Journal of international Financial markets, institutions and money, 16(2), 123-142.

Fairfield, P. M., & Yohn, T. L. (2001). Using asset turnover and profit margin to forecast changes in profitability. Review of Accounting Studies, 6(4), 371-385.

Hirshleifer, D., Hou, K., Teoh, S. H., & Zhang, Y. (2004). Do investors overvalue firms with bloated balance sheets?. Journal of Accounting and Economics, 38, 297-331.

Hwang, S., & Salmon, M. (2006). Sentiment and beta herding. Behavioural Finance and Market Efficiency, Warwick Business School.

Olsen, R. A. (1998). Behavioral finance and its implications for stock-price volatility. Financial Analysts Journal, 54(2), 10-18.