Determining Share Price: An Empirical Evidence from PSX

Nimra Sharif, Nawaz Ahmad, Tahira Yawer Ali


The stock market is considered as the major indicator of the success of any country. The various dynamics operating therein are of enormous interest for a financial analyst, policymakers, stakeholders or more or less the majority of the people across the globe. Within the stock market, the most interested and controversial topic is a determination of valuation mechanics by which share prices fluctuations can be understood and a model fit for investment criteria could be established. Boundless factors have discovered and some are still in the process of discovery to get a hang of share prices fluctuations mechanism. So keeping this in mind this research is targeted to explore a linkage between earning per share (EPS) and share prices, taking a sample of five fertilizer Sector Company for a period of 12 years making the aggregative amount of data up to 60 observations. Data is collected from the company fundamentals released in annual reports of the company. In order to explore the causal mechanism between the two variables, a regression test is employed. Pearson correlation is also used as an extension to the analysis. The results of the study approved the previous literary contributions in this area by highlighting the highly statistically significant positive relationship between share prices and EPS since F( 1,58)=191.205, p<0.05.

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Prof. Dr. Ejaz Ahmed 
College of Computer Science & Information Systems


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