The Role of Competing Financial Indicators in Explaining Earnings: Evidence from Palestine Exchangeرسالة ماجستير

Abstract

This study explores " The Role of Competing Financial Indicators in Explaining Earnings: Evidence from Palestine Exchange," focusing on the value relevance of three key financial metrics—free cash flow, dividend per share, and operating cash flow—in explaining Earnings Per Share (EPS) for companies listed on the Palestine Exchange. Employing a descriptive analysis approach, the research utilized financial statements data from 2015 to 2022, covering 22 companies (13 industrial and 9 service company’s) across 176 observations. The regression model analyzing Earnings Per Share (EPS) for companies on the Palestine Exchange uses dividends per share, operational cash flow ratio, and free cash flow as predictors. The model explains about 11.4% of the variability in EPS, with an adjusted R Square of 0.086, indicating the predictors still have significant explanatory power despite the modest fit. The analysis revealed that dividends per share (β = 0.351, p = 0.001) have a significant and positive impact on Earnings Per Share (EPS), indicating that higher dividends per share are associated with increased Earnings Per Share (EPS). In contrast, free cash flow (β = -4.088 x 10^-10, p = 0.755) and operating cash flow ratio (β = -0.026, p = 0.672) did not show statistically significant effects on Earnings Per Share (EPS). These results underscore the importance of dividends per share as a valuable indicator in the context of the Palestine Exchange during the study period. The study recommends adopting a nuanced and multifaceted approach to financial analysis and decision making on the Palestine Exchange, highlighting the need to consider various metrics and contextual factors to enhance investment strategies