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

Durango

Conferencia; XXIII International Finance Conference; 2023

International Finance Conference

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.