Template-Type: ReDIF-Article 1.0
Author-Name: Nung Hong Do
Author-Workplace-Name: National Economics University, 207 Giai Phong Road, Hai Ba Trung District, 100000 Hanoi, Vietnam
Author-Email: nhungdh@gmail.com
Author-Name: Nha Van Tue Pham
Author-Workplace-Name:National Economics University, 207 Giai Phong Road, Hai Ba Trung District, 100000 Hanoi, Vietnam
Title:The Influence of Sustainable Earnings on Stock Price: Evidence from Publicly Listed Vietnamese Business Enterprises 
Abstract: Expected earnings and stock price are important determinants of investors’ decision. This research is conducted to estimate earnings persistence and examine the relationship between sustainable earnings on price-to-earning (P/E) ratio based on financial statements’ information of 631 publicly listed non-financial companies on Vietnam’s stock market, by using Ordinary Least Squares (OLS) and Logit function. The results show that earnings persistence depends on net operating assets growth, profit margin changes, operating asset turnover changes and past profitability. Besides, both the sustainable and unsustainable components of earnings growth are proved to empirically affect P/E ratio, even though investors underreact to sustainable earnings and overreact to unsustainable earnings. This study helps to improve investors’ perception of their future earnings, investment value and companies’ sustainable growth, particularly in the context of developing stock market of Vietnam which is full of market anomalies.
Keywords: earnings persistence, earnings per share, market price, P/E, returns on net operating assets (RNOA)
Pages: 101-121
Volume: 16
Issue: 2
Year: 2020
File-URL: http://web.usm.my/journal/aamjaf/aamjaf16022020/aamjaf16022020_5.pdf
File-Format: Application/pdf
Handle: RePEc:usm:journl:aamjaf01602_101-121