Are the indicators obtained from financial information relevant for explaining the returns of stocks? Empirical analysis in Latin American markets

TOLOSA, LETICIA EVA; CARO, NORMA PATRICIA; BRITOS, MARTIN

Durango

Conferencia; International Finance Conference 2023; 2023

Universidad Juárez del Estado de Durango

The purpose of this research is to validate an explanatory framework using a theoretical model and financial information to provide a better understanding of the annual returns (MR) obtained by companies in the market. To achieve this, liquidity (IL), solvency (IS), and profitability (IR) indicators are calculated. Through a structural equation model (SEM), the aim is to explain the returns of shares in the markets by introducing a mediating variable, capital structure (EC), between the defined indicators and the returns of the shares.The empirical testing of this proposed theoretical model is conducted using data from companies listed in four Latin American markets. These markets include S&P MERVAL (Argentina), BOVESPA (Brazil), IPSA (Chile), and MEXBOL (Mexico). Data from non-banking companies is selected for the time period of 2010-2022.The present work begins by presenting the research objectives, followed by a concise theoretical framework that supports the validation of the model presented for the analysis conducted. As this is an applied research study focused solely on four Latin American markets, the methodology section explains how the sample was taken, which variables were used, and how the model's indicators were calculated. Finally, conclusions are presented and the encountered limitations are mentioned, along with proposed lines of research to continue the analysis.