Presenting Models to Applying the Fundamental Analysis Strategy in Stock Return Prediction

Document Type : Research Paper

Authors

1 Faculty Member, Faculty of Economics and Accounting, Islamic Azad University, South Tehran Branch, Tehran, Iran

2 faculty member, Islamic Azad University, East Tehran Branch

Abstract

Fundamental and technical analysis, which both forecast the stock price direction, always contrast. Meantime, fundamental analyses investigate the reasons for stock price changes and technical ones challenge their impacts. Fundamentalists pay attention the intrinsic value of securities and believe that the value of each share can be scientifically specified and they mostly rely on economics, financial statistics, and information. Also, using indexes distinguishing strong firms from weak firms in terms of operational and financial capabilities, investors can maximize their returns. Presenting models based on accounting data, this study tried to examine the possibility of achieving maximum returns on growth, value, and common stocks. In this regard, the indexes were F-Score and CORFS. The population of the study included all listed firms in Tehran Stock Exchange during the years 2008 to 2017, and the sample was selected through systemic elimination from the population. Given that, 118 firms were selected as the sample. It should be noted that the hypotheses were tested by conducting ANOVA tests and designing multivariate regression models. The results showed that higher returns cannot be obtained by forming and calculating F-Score; higher returns can be obtained by forming and calculating CORFS; thus, CORFS brings about higher returns than F-Score.

Keywords

Financial Management Strategy

Articles in Press, Accepted Manuscript
Available Online from 25 February 2023

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History

  • Receive Date: 12 November 2019
  • Revise Date: 28 June 2020
  • Accept Date: 31 January 2020

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