Is the price-to book/return on equity ratio constant across sectors?

This research paper investigates whether or not the Price-to-Book/ Return on Equity ratio is constant across the banking, retail, pharmaceutical and manufacturing sectors. The study makes use of statistical tests to determine if the ratio is constant. In addition, the research paper investigates the explicatory powers of the DuPont model, the Federal interest rate, and Consumer price inflation of the Price-to-Book/ Return on Equity ratio. This research documents evidence that the Price-to-Book/Return on Equity ratio is not constant across sectors and that the explicatory powers of the DuPont model differ from sector to sector. The implications of these findings are that investors cannot apply the same Price-to-Book/ Return on Equity ratio across sectors when evaluating stocks relative to each other.

Grantor dc:publisher.institution

Department of Finance and Tax

Year dc:date.issued

2011

Author dc:creator

• Coultas, Andrew

Advisor dc:contributor.advisor

• Gstraunthaler, Thomas

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/11427/10321

OAI identifier oai:identifier

oai:open.uct.ac.za:11427/10321