The Risk Indicators for the Return Volatility of Earnings Per Share: Evidence from Service Industry Firms Listed on the Stock Exchange of Thailand
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Published
Apr 25, 2023
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Abstract
This research was undertaken to examine the volatility of the earnings per share of firms in service industry listed on the Stock Exchange of Thailand. Measuring risks by indicating the volatility of firms is one of key tools used to represent risks affecting firms’ capacity to generate returns, especially earnings per share. One hundred and forty-six service industry firms in Thailand listed on the SET and MAI were selected as the unit of analysis to collect secondary cross-sectional data about their average financial information in the annual reports submitted from 2016 to 2020. Multiple regression was employed for the analysis of the secondary data by using PLS-SEM statistics. The research results found that earnings per share influenced the size of service firms listed on the SET and MAI. The findings suggest that firms in the service industry will have increased earnings per share if they have a high level of risk. Additionally, the type of firm acted as a moderator in the model. In terms of implications, our findings suggest that the level of volatility could be used as a tool to assess firms and estimate and predict their future returns.
Keywords: Earnings Per Share, Risk Indicator, Service Industry Firms, SET, MAI, Volatility
References
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Al-Natsheh, N., & Al-Okdeh, S. (2020). The Impact of Creative Accounting Methods on Earnings Per Share. Management Science Letters, 10(4), 831-840. https://doi.org/10.5267/j.msl.2019.10.014
Armstrong, J., & Brigo, D. (2019). Risk Managing Tail-risk Seekers: VaR and Expected Shortfall vs S-shaped Utility. Journal of Banking & Finance, 101, 122-135. https://doi.org/10.1016/j.jbankfin.2019.01.010
Arora, A., & Sharma, C. (2016). Corporate Governance and Firm Performance in Developing Countries: Evidence from India. Corporate Governance, 16(2), 420-436. https://doi.org/10.1108/CG-01-2016-0018
Atidhira, A. T., & Yustina, A. I. (2017). The Influence of Return on Asset, Debt to Equity Ratio, Earnings Per Share, and Company Size on Share Return in Property and Real Estate Companies. Journal of Applied Accounting and Finance, 1(2), 128-146. Retrieved from http://e-journal.president.ac.id/presunivojs/index.php/JAAF/article/view/363
Baek, S., Mohanty, S. K., & Glambosky, M. (2020). COVID-19 and Stock Market Volatility: An Industry Level Analysis. Finance Research Letters, 37, 101748. https://doi.org/10.1016/j.frl.2020.101748
Batchimeg, B. (2017). Financial Performance Determinants of Organizations: The Case of Mongolian Companies. Journal of Competitiveness, 9(3), 22-33. https://doi.org/10.7441/joc.2017.03.02
Bernard, C., Rüschendorf, L., & Vanduffel, S. (2017). Value-at-Risk Bounds with Variance Constraints. Journal of Risk and Insurance, 84(3), 923-959. https://doi.org/10.1111/jori.12108
Budiarso, N. S., & Pontoh, W. (2019). Does Maturity Signals High Risk and High Return? Indonesia Accounting Journal, 1(1), 1-5. https://doi.org/10.32400/iaj.25404
Chanyasak, T., Koseoglu, M. A., King, B., & Aladag, O. F. (2022). Business Model Adaptation as a Strategic Response to Crises: Navigating the COVID-19 Pandemic. International Journal of Tourism Cities, 8(3), 616-635. https://doi.org/10.1108/IJTC-02-2021-0026
Chattopadhyay, B., & Kelley, K. (2016). Estimation of the Coefficient of Variation with Minimum Risk: A Sequential Method for Minimizing Sampling Error and Study Cost. Multivariate Behavioral Research, 51(5), 627-648. https://doi.org/10.1080/00273171.2016.1203279
Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signaling Theory: A Review and Assessment. Journal of Management, 37(1), 39-67. https://doi.org/10.1177/0149206310388419
Dang, C., Li, Z. F., & Yang, C. (2018). Measuring Firm Size in Empirical Corporate Finance. Journal of Banking & Finance, 86, 159-176. https://doi.org/10.1016/j.jbankfin.2017.09.006
Ejoh, N. O., Oko, S. U., & Akpanke, D. S.-M. (2019). Audit Quality Effects on Earnings Management of Manufacturing Firms in Nigeria: A Comparative Study of Pre- and Post-International Financial Reporting Standard (IFRS) Period. Research Journal of Finance and Accounting, 10(24), 17-28. http://doi.org/10.7176/RJFA/10-24-03
Fajaria, A. Z., & Isnalita. (2018). The Effect of Profitability, Liquidity, Leverage and Firm Growth of Firm Value with its Dividend Policy as a Moderating Variable. International Journal of Managerial Studies and Research, 6(10), 55-69. http://doi.org/10.20431/2349-0349.0610005
Ghimire, R. R., & Mishra, D. (2018). Determinants of Stock Price in Nepalese Market. International Research Journal of Management Science, 3, 123-135. https://doi.org/10.3126/irjms.v3i0.28041
Ghosh, P. K., Khatun, M., & Tarafdar, P. (2018). Bankruptcy Via Earning Volatility: Does It Integrate in Financial Institutions? Asian Economic and Financial Review, 8(1), 52-62. https://doi.org/10.18488/journal.aefr.2018.81.52.62
Hair, J. F., Jr., Matthews, L. M., Matthews, R. L., & Sarstedt, M. (2017). PLS-SEM or CB-SEM: Updated Guidelines on which Method to Use. International Journal of Multivariate Data Analysis, 1(2), 107-123. https://doi.org/10.1504/IJMDA.2017.087624
Haltiwanger, J. C., Hyatt, H. R., Kahn, L. B., & McEntarfer, E. (2018). Cyclical Job Ladders by Firm Size and Firm Wage. American Economic Journal: Macroeconomics, 10(2), 52-85. https://doi.org/10.1257/mac.20150245
Hama, A., & Santosa, H. P. (2018). Effect of Working Capital, Company Size, and Company Growth on Profitability and Company Value. International Journal of Social Sciences, 4(2), 694-708. http://doi.org/10.20319/pijss.2018.42.694708
Haskins, M. E., & Simko, P. J. (2017). Net Income’s Bandwidth: An Examination of Earnings-based Performance Metrics. Journal of Managerial Issues, 29(2), 211–234. Retrieved from http://www.jstor.org/stable/45176544
Huang, X. (2020). The Risk of Betting on Risk: Conditional Variance and Correlation of Bank Credit Default Swaps. The Journal of Futures Markets, 40(5), 710-721. https://doi.org/10.1002/fut.22068
Jasman, J., & Kasran, M. (2017). Profitability, Earnings Per Share on Stock Return with Size as Moderation. Trikonomika, 16(2), 88-94. http://doi.org/10.23969/trikonomika.v16i2.559
Kaplan, Y. (2019). Determination of Weibull Parameters Using the Standard Deviation Method and Performance Comparison at Different Locations. Scientia Iranica, 27(6), 3075-3083. https://doi.org/10.24200/SCI.2019.50323.1632
Kim, T., & Marler, L. E. (2020). The Impact of Family Ownership on Firm Innovation and the Moderating Effect of Cooperation. In S. Taneja (Ed.), Academy of Management Proceedings, Vol. 2020 No. 1 (p. 18282). New York, USA: Academy of Management. https://doi.org/10.5465/AMBPP.2020.18282abstract
Kumar, P. (2017). Impact of Earning Per Share and Price Earnings Ratio on Market Price of Share: A Study on Auto Sector in India. International Journal of Research-Granthaalayah, 5(2), 113-118. http://doi.org/10.29121/granthaalayah.v5.i2.2017.1710
Kuncová, M., Hedija, V., & Fiala, R. (2016). Firm Size as a Determinant of Firm Performance: The Case of Swine Raising. Agris On-line Papers in Economics and Informatics, 8(3), 77-89. http://doi.org/10.7160/aol.2016.080308
Leal-Rodríguez, A. L., Eldridge, S., Roldán, J. L., Leal-Millán, A. G., & Ortega-Gutiérrez, J. (2015). Organizational Unlearning, Innovation Outcomes, and Performance: The Moderating Effect of Firm Size. Journal of Business Research, 68(4), 803-809. https://doi.org/10.1016/j.jbusres.2014.11.032
Odalo, S. K., Achoki, G., & Njuguna, A. (2016). Relating Company Size and Financial Performance in Agricultural Firms Listed in the Nairobi Securities Exchange in Kenya. International Journal of Economics and Finance, 8(9), 34-40. http://doi.org/10.5539/ijef.v8n9p34
Rockafellar, R. T., & Uryasev, S. (2013). The Fundamental Risk Quadrangle in Risk Management, Optimization and Statistical Estimation. Surveys in Operations Research and Management Science, 18(1-2), 33-53. https://doi.org/10.1016/j.sorms.2013.03.001
Sanoor, N., Kumar, S., & Venoor, A. (2018). Analysis of Impact of Earning Per Share, Dividend Per Share and Price Earnings Ratio on Stock Performance. International Journal of Research in Economics and Social Sciences (IJRESS), 8(3), 187-214.
Sha, T. L. (2017). Effects of Price Earnings Ratio, Earnings Per Share, Book to Market Ratio and Gross Domestic Product on Stock Prices of Property and Real Estate Companies in Indonesia Stock Exchange. International Journal of Economic Perspectives, 11(1), 1743-1754.
Silahli, B., Dingec, K. D., Cifter, A., & Aydin, N. (2021). Portfolio Value-at-Risk with Two-sided Weibull Distribution: Evidence from Cryptocurrency Markets. Finance Research Letters, 38, 101425. https://doi.org/10.1016/j.frl.2019.101425
Strand, G.-H. (2017). A Study of Variance Estimation Methods for Systematic Spatial Sampling. Spatial Statistics, 21, 226-240. https://doi.org/10.1016/j.spasta.2017.06.008
Suyanto, S. (2021). The Impact of Covid-19 Pandemic on the Effect of Earnings Per Share on Price to Book Value with Firm Size as Intervening Variable. Academy of Strategic Management Journal, 20(5), 1-9. Retrieved from https://www.abacademies.org/articles/the-impact-of-covid19-pandemic-on-the-effect-of-earnings-per-share-on-price-to-book-value-with-firm-size-as-intervening-variable-11570.html
The Stock Exchange of Thailand. (n.d.). Companies/Securities in Focus. Retrieved from https://classic.set.or.th/set/commonslookup.do?language=en&country=US
Tsiotas, G. (2018). A Bayesian Encompassing Test Using Combined Value-at-Risk Estimates. Quantitative Finance, 18(3), 395-417. https://doi.org/10.1080/14697688.2017.1330551
Toubiana, D., & Maruenda, H. (2021). Guidelines for Correlation Coefficient Threshold Settings in Metabolite Correlation Networks Exemplified on a Potato Association Panel. BMC Bioinformatics, 22(1), 1-14. http://doi.org/10.1186/s12859-021-03994-z
Wongsuwatt, S., & Suntrayuth, S. (2019). The Influence of Risk Perception and Proactive Behavior on Performance of Firms. The Journal of Risk Management and Insurance, 23(2), 1-14. Retrieved from https://jrmi.au.edu/index.php/jrmi/article/view/185
Yang, M., Bento, P., & Akbar, A. (2019). Does CSR Influence Firm Performance Indicators? Evidence from Chinese Pharmaceutical Enterprises. Sustainability, 11(20), 5656. https://doi.org/10.3390/su11205656
Zhong, L., Wayne, S. J., & Liden, R. C. (2016). Job Engagement, Perceived Organizational Support, High-performance Human Resource Practices, and Cultural Value Orientations: A Cross-level Investigation. Journal of Organizational Behavior, 37(6), 823-844. https://doi.org/10.1002/job.2076
Alarussi, A. S., & Alhaderi, S. M. (2018). Factors Affecting Profitability in Malaysia. Journal of Economic Studies, 45(3), 442-458. https://doi.org/10.1108/JES-05-2017-0124
Al-Natsheh, N., & Al-Okdeh, S. (2020). The Impact of Creative Accounting Methods on Earnings Per Share. Management Science Letters, 10(4), 831-840. https://doi.org/10.5267/j.msl.2019.10.014
Armstrong, J., & Brigo, D. (2019). Risk Managing Tail-risk Seekers: VaR and Expected Shortfall vs S-shaped Utility. Journal of Banking & Finance, 101, 122-135. https://doi.org/10.1016/j.jbankfin.2019.01.010
Arora, A., & Sharma, C. (2016). Corporate Governance and Firm Performance in Developing Countries: Evidence from India. Corporate Governance, 16(2), 420-436. https://doi.org/10.1108/CG-01-2016-0018
Atidhira, A. T., & Yustina, A. I. (2017). The Influence of Return on Asset, Debt to Equity Ratio, Earnings Per Share, and Company Size on Share Return in Property and Real Estate Companies. Journal of Applied Accounting and Finance, 1(2), 128-146. Retrieved from http://e-journal.president.ac.id/presunivojs/index.php/JAAF/article/view/363
Baek, S., Mohanty, S. K., & Glambosky, M. (2020). COVID-19 and Stock Market Volatility: An Industry Level Analysis. Finance Research Letters, 37, 101748. https://doi.org/10.1016/j.frl.2020.101748
Batchimeg, B. (2017). Financial Performance Determinants of Organizations: The Case of Mongolian Companies. Journal of Competitiveness, 9(3), 22-33. https://doi.org/10.7441/joc.2017.03.02
Bernard, C., Rüschendorf, L., & Vanduffel, S. (2017). Value-at-Risk Bounds with Variance Constraints. Journal of Risk and Insurance, 84(3), 923-959. https://doi.org/10.1111/jori.12108
Budiarso, N. S., & Pontoh, W. (2019). Does Maturity Signals High Risk and High Return? Indonesia Accounting Journal, 1(1), 1-5. https://doi.org/10.32400/iaj.25404
Chanyasak, T., Koseoglu, M. A., King, B., & Aladag, O. F. (2022). Business Model Adaptation as a Strategic Response to Crises: Navigating the COVID-19 Pandemic. International Journal of Tourism Cities, 8(3), 616-635. https://doi.org/10.1108/IJTC-02-2021-0026
Chattopadhyay, B., & Kelley, K. (2016). Estimation of the Coefficient of Variation with Minimum Risk: A Sequential Method for Minimizing Sampling Error and Study Cost. Multivariate Behavioral Research, 51(5), 627-648. https://doi.org/10.1080/00273171.2016.1203279
Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signaling Theory: A Review and Assessment. Journal of Management, 37(1), 39-67. https://doi.org/10.1177/0149206310388419
Dang, C., Li, Z. F., & Yang, C. (2018). Measuring Firm Size in Empirical Corporate Finance. Journal of Banking & Finance, 86, 159-176. https://doi.org/10.1016/j.jbankfin.2017.09.006
Ejoh, N. O., Oko, S. U., & Akpanke, D. S.-M. (2019). Audit Quality Effects on Earnings Management of Manufacturing Firms in Nigeria: A Comparative Study of Pre- and Post-International Financial Reporting Standard (IFRS) Period. Research Journal of Finance and Accounting, 10(24), 17-28. http://doi.org/10.7176/RJFA/10-24-03
Fajaria, A. Z., & Isnalita. (2018). The Effect of Profitability, Liquidity, Leverage and Firm Growth of Firm Value with its Dividend Policy as a Moderating Variable. International Journal of Managerial Studies and Research, 6(10), 55-69. http://doi.org/10.20431/2349-0349.0610005
Ghimire, R. R., & Mishra, D. (2018). Determinants of Stock Price in Nepalese Market. International Research Journal of Management Science, 3, 123-135. https://doi.org/10.3126/irjms.v3i0.28041
Ghosh, P. K., Khatun, M., & Tarafdar, P. (2018). Bankruptcy Via Earning Volatility: Does It Integrate in Financial Institutions? Asian Economic and Financial Review, 8(1), 52-62. https://doi.org/10.18488/journal.aefr.2018.81.52.62
Hair, J. F., Jr., Matthews, L. M., Matthews, R. L., & Sarstedt, M. (2017). PLS-SEM or CB-SEM: Updated Guidelines on which Method to Use. International Journal of Multivariate Data Analysis, 1(2), 107-123. https://doi.org/10.1504/IJMDA.2017.087624
Haltiwanger, J. C., Hyatt, H. R., Kahn, L. B., & McEntarfer, E. (2018). Cyclical Job Ladders by Firm Size and Firm Wage. American Economic Journal: Macroeconomics, 10(2), 52-85. https://doi.org/10.1257/mac.20150245
Hama, A., & Santosa, H. P. (2018). Effect of Working Capital, Company Size, and Company Growth on Profitability and Company Value. International Journal of Social Sciences, 4(2), 694-708. http://doi.org/10.20319/pijss.2018.42.694708
Haskins, M. E., & Simko, P. J. (2017). Net Income’s Bandwidth: An Examination of Earnings-based Performance Metrics. Journal of Managerial Issues, 29(2), 211–234. Retrieved from http://www.jstor.org/stable/45176544
Huang, X. (2020). The Risk of Betting on Risk: Conditional Variance and Correlation of Bank Credit Default Swaps. The Journal of Futures Markets, 40(5), 710-721. https://doi.org/10.1002/fut.22068
Jasman, J., & Kasran, M. (2017). Profitability, Earnings Per Share on Stock Return with Size as Moderation. Trikonomika, 16(2), 88-94. http://doi.org/10.23969/trikonomika.v16i2.559
Kaplan, Y. (2019). Determination of Weibull Parameters Using the Standard Deviation Method and Performance Comparison at Different Locations. Scientia Iranica, 27(6), 3075-3083. https://doi.org/10.24200/SCI.2019.50323.1632
Kim, T., & Marler, L. E. (2020). The Impact of Family Ownership on Firm Innovation and the Moderating Effect of Cooperation. In S. Taneja (Ed.), Academy of Management Proceedings, Vol. 2020 No. 1 (p. 18282). New York, USA: Academy of Management. https://doi.org/10.5465/AMBPP.2020.18282abstract
Kumar, P. (2017). Impact of Earning Per Share and Price Earnings Ratio on Market Price of Share: A Study on Auto Sector in India. International Journal of Research-Granthaalayah, 5(2), 113-118. http://doi.org/10.29121/granthaalayah.v5.i2.2017.1710
Kuncová, M., Hedija, V., & Fiala, R. (2016). Firm Size as a Determinant of Firm Performance: The Case of Swine Raising. Agris On-line Papers in Economics and Informatics, 8(3), 77-89. http://doi.org/10.7160/aol.2016.080308
Leal-Rodríguez, A. L., Eldridge, S., Roldán, J. L., Leal-Millán, A. G., & Ortega-Gutiérrez, J. (2015). Organizational Unlearning, Innovation Outcomes, and Performance: The Moderating Effect of Firm Size. Journal of Business Research, 68(4), 803-809. https://doi.org/10.1016/j.jbusres.2014.11.032
Odalo, S. K., Achoki, G., & Njuguna, A. (2016). Relating Company Size and Financial Performance in Agricultural Firms Listed in the Nairobi Securities Exchange in Kenya. International Journal of Economics and Finance, 8(9), 34-40. http://doi.org/10.5539/ijef.v8n9p34
Rockafellar, R. T., & Uryasev, S. (2013). The Fundamental Risk Quadrangle in Risk Management, Optimization and Statistical Estimation. Surveys in Operations Research and Management Science, 18(1-2), 33-53. https://doi.org/10.1016/j.sorms.2013.03.001
Sanoor, N., Kumar, S., & Venoor, A. (2018). Analysis of Impact of Earning Per Share, Dividend Per Share and Price Earnings Ratio on Stock Performance. International Journal of Research in Economics and Social Sciences (IJRESS), 8(3), 187-214.
Sha, T. L. (2017). Effects of Price Earnings Ratio, Earnings Per Share, Book to Market Ratio and Gross Domestic Product on Stock Prices of Property and Real Estate Companies in Indonesia Stock Exchange. International Journal of Economic Perspectives, 11(1), 1743-1754.
Silahli, B., Dingec, K. D., Cifter, A., & Aydin, N. (2021). Portfolio Value-at-Risk with Two-sided Weibull Distribution: Evidence from Cryptocurrency Markets. Finance Research Letters, 38, 101425. https://doi.org/10.1016/j.frl.2019.101425
Strand, G.-H. (2017). A Study of Variance Estimation Methods for Systematic Spatial Sampling. Spatial Statistics, 21, 226-240. https://doi.org/10.1016/j.spasta.2017.06.008
Suyanto, S. (2021). The Impact of Covid-19 Pandemic on the Effect of Earnings Per Share on Price to Book Value with Firm Size as Intervening Variable. Academy of Strategic Management Journal, 20(5), 1-9. Retrieved from https://www.abacademies.org/articles/the-impact-of-covid19-pandemic-on-the-effect-of-earnings-per-share-on-price-to-book-value-with-firm-size-as-intervening-variable-11570.html
The Stock Exchange of Thailand. (n.d.). Companies/Securities in Focus. Retrieved from https://classic.set.or.th/set/commonslookup.do?language=en&country=US
Tsiotas, G. (2018). A Bayesian Encompassing Test Using Combined Value-at-Risk Estimates. Quantitative Finance, 18(3), 395-417. https://doi.org/10.1080/14697688.2017.1330551
Toubiana, D., & Maruenda, H. (2021). Guidelines for Correlation Coefficient Threshold Settings in Metabolite Correlation Networks Exemplified on a Potato Association Panel. BMC Bioinformatics, 22(1), 1-14. http://doi.org/10.1186/s12859-021-03994-z
Wongsuwatt, S., & Suntrayuth, S. (2019). The Influence of Risk Perception and Proactive Behavior on Performance of Firms. The Journal of Risk Management and Insurance, 23(2), 1-14. Retrieved from https://jrmi.au.edu/index.php/jrmi/article/view/185
Yang, M., Bento, P., & Akbar, A. (2019). Does CSR Influence Firm Performance Indicators? Evidence from Chinese Pharmaceutical Enterprises. Sustainability, 11(20), 5656. https://doi.org/10.3390/su11205656
Zhong, L., Wayne, S. J., & Liden, R. C. (2016). Job Engagement, Perceived Organizational Support, High-performance Human Resource Practices, and Cultural Value Orientations: A Cross-level Investigation. Journal of Organizational Behavior, 37(6), 823-844. https://doi.org/10.1002/job.2076
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Research Articles
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How to Cite
WONGSUWATT, Sippavit; THAOTHAMPITAK, Wipada.
The Risk Indicators for the Return Volatility of Earnings Per Share: Evidence from Service Industry Firms Listed on the Stock Exchange of Thailand.
Journal of Community Development Research (Humanities and Social Sciences), [S.l.], v. 16, n. 2, p. 1-13, apr. 2023.
ISSN 2985-0231.
Available at: <https://www.journal.nu.ac.th/JCDR/article/view/Vol-16-No-2-2023-1-13>. Date accessed: 29 apr. 2024.
doi: https://doi.org/10.14456/jcdr-hs.2023.11.