Elements Indicating Stock Price Movements: The Case of the Companies Listed on the V4 Stock Exchanges
Date Issued
2021
Author(s)
Aliu, Florin
Nadirov, Orkhan
Nuhiu, Artor
Abstract
Stock markets stand as a financial mechanism that provides liquidity for firms and offers
diversification benefits for investors. Stock markets in the Eastern European countries are weak-form efficient which exposes them to speculative prices. This study investigates the influence of the
macroeconomic and firm-specific factors on stock prices of the listed companies within the Visegrad
Stock Markets. The study employs regression analyses based on a Pooled OLS and Fixed Effect
models with year dummies and standard errors clustered at the country level, which are robust to
auto-correlation and heteroscedasticity. Data collection consists of 55 listed companies based on the
weekly stock prices, from January 2013 till December 2018. The results indicate that total equity is
the only significant element that influences the individual stock prices of the companies in the four
established models. Additionally, increase in supply of shares declines the current stock prices and
the other way around. However, the exchange rate and inflation level indicate a negative influence on
the stock prices with weaker significance. The findings show that stock markets of the V4 countries
are overall inefficient since important indicators, such as economic activity, debt level, cash flow,
firm size, oil, and gold prices have limited influence on the stock price movements.
diversification benefits for investors. Stock markets in the Eastern European countries are weak-form efficient which exposes them to speculative prices. This study investigates the influence of the
macroeconomic and firm-specific factors on stock prices of the listed companies within the Visegrad
Stock Markets. The study employs regression analyses based on a Pooled OLS and Fixed Effect
models with year dummies and standard errors clustered at the country level, which are robust to
auto-correlation and heteroscedasticity. Data collection consists of 55 listed companies based on the
weekly stock prices, from January 2013 till December 2018. The results indicate that total equity is
the only significant element that influences the individual stock prices of the companies in the four
established models. Additionally, increase in supply of shares declines the current stock prices and
the other way around. However, the exchange rate and inflation level indicate a negative influence on
the stock prices with weaker significance. The findings show that stock markets of the V4 countries
are overall inefficient since important indicators, such as economic activity, debt level, cash flow,
firm size, oil, and gold prices have limited influence on the stock price movements.