Profitability and Stock Returns With Regard To Life Cycle and Industry Type

Zahra Moradi, Ali Akbar Arbabian, Bita Damghani

Abstract


The main aim of this study was to investigate and analyses the relationship between profitability and stock returns with regard to firm’s Life Cycle and Industry Type of the companies listed in Tehran Stock Exchange. To this aim, Return on Assets (ROA) was considered as the independent variable, the rate of firms’ stock returns as the dependent variable, and the firm’s Life Cycle and Industry Type as the control variables. In this study, the required data were collected during the time span of the years 2012 to 2017 and with regard to five industry, being chemical industry, food industry, inorganic nonmetal industry, pharmaceutical industry, and car industry. The results of investigating 111 companies showed that firm’s Life Cycle and Industry Type were influential in the relationship between profitability and stock returns, leading to an increase in adjusted R2.

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