JOURNAL PAPER

Nusrat Rahman, Firm Fundamentals, Market Conditions, and P/E Ratios: Cross Industry Insight from Bangladesh, Jahangirnagar University Journal of Business Research, Volume 25, 02, pp.45-64, 2025. doi: https://doi.org/10.53461/jujbr.v25i02.99

This study examines the key determinants of the price-to-earnings (P/E) ratio in Bangladesh’s capital market, focusing on firm-specific, non-financial, and macroeconomic variables. A sample of 81 non-financial companies from 13 industries, representing 69% of the non-financial equity market and 53% of the total market capitalization, is analyzed using descriptive statistics, correlation matrices, and panel data techniques. After addressing model specification issues using the Panel Corrected Standard Errors (PCSE) model, the findings reveal that asset size and return on equity (ROE) have a significant positive effect on the P/E ratio, while the dividend payout ratio (DPR) and industry average P/E ratio (IAPE) exert a significant negative influence. The study highlights notable industry-level differences, with free float percentage significantly impacting P/E ratios in sectors such as Cement, Fuel & Power, IT, and Telecom. Overall, firm-level financial and non-financial indicators are more influential than macroeconomic factors in determining P/E ratios in Bangladesh.

Nusrat Rahman and Md. Yousuf Harun, Interest rate reforms and firm performance in Bangladesh’s manufacturing sector, Asian Economic and Financial Review, 15, 11, pp.1714-1730, 2025. doi: 10.55493/5002.v15i11.5661

The study investigates the effects of a single-digit (6%–9%) interest rate set by the Bangladesh Bank in 2020, involving 94 listed manufacturing companies across 10 industries from 2018 to 2023. The key objective of the research is to examine the impact of such interest rate reform on financial performance, proxied by Return on Assets (ROA), Return on Equity (ROE), and Market-to-Book (M/B) ratio. Fixed and random effects panel data analysis techniques and the system generalized method of moments (GMM) have been applied to address heteroskedasticity, autocorrelation, and endogeneity. The results show that lower interest rates improve ROA and ROE, especially for capital-intensive industries like textiles and engineering, because of reduced borrowing costs. Higher lending rates and debt leverage adversely affect the M/B ratio, indicating that investors are concerned about the increase in debt levels. Price fluctuations in the exchange rate affect firm performance, which relies on imports. Additionally, firms with larger sizes and higher GDP growth perform better in the market. The study highlights the need for a dynamic and sector-focused interest rate policy to improve the resilience of the manufacturing sector, as well as strategies like capacity building in financial management to ensure long-term sustainability. To address the limitations of this study, future research should use probability sampling together with unlisted firm data and combine primary and secondary data while expanding the study period after the post-pandemic period. Moreover, cross-industry analysis will help achieve a better understanding of long-term interest rate effects on manufacturing firm performance.

Nusrat Rahman and Md. Yousuf Harun, Examining Volatility in Bank Stock Prices: A Comparative Exploration of Dividend Policies, Macroeconomic Influences, and Company-Specific Factors, Jahangirnagar University Journal of Business Research (JUJBR), 23, 02, pp.123-146, 2023. doi: https://doi.org/10.53461/jujbr.v23i2.30

This study aims to ascertain and compare factors influencing stock price volatility in terms of dividend policy, macroeconomic and company specific aspects for selected subset of listed banks in Bangladesh. The study not only found significant negative impact of dividend payout ratio but also spotted a significant influence of inflation, EPS, and firm size on stock price volatility. Price volatility influenced by “No dividend policy” can be reinvestigated from the aspect of behavioral finance in the future. Furthermore, this study also sheds light on to what extent firm-specific and macroeconomic influence impact stock price volatility in Bangladesh's banking sector.

Nusrat Rahman, An Empirical Analysis of Weak Form Market Efficiency-Evidence From Dhaka Stock Exchange, The Jahangirnagar Journal of Finance & Banking, Volume 7, June, pp.51-76, 2019. doi: 10.13140/RG.2.2.19235.32803

This research empirically tested the weak-form efficient market hypothesis of the Dhaka Stock Exchange (DSE) by hypothesizing normality of the return distribution series, random walk assumption and efficiency across time. This study also provides evidence on the existence of the day-of-the-week effect.Daily market return of DSE were examined for normal distribution and random walk from. Our normality tests were made using skewness, kurtosis, Kolmogorov-Smirnov and Shapiro Wilk Test; whereas weak-form efficiency was tested using a set of Parametric (auto correlation coefficient test, unit root test, ARIMA) and Nonparametric tests (runs test) for both total and sub-sample periods. The day-of-the-week effect is tested using the ordinary least squares (OLS) regression. Outcomes of the normality tests provided the evidence that market return series is not normally distributed. Return series is negatively skewed and leptokurtic. The results of the Runs test for the observed returns show that the actual number of runs were fewer than the expected number of runs for all periods examined which indicates return series has trend. Presence of significant auto correlation in different lags and predictability of return through ARIMA model clearly indicated that return series do not follow random walk model. Thus, the empirical results of this study support that DSE is not efficient in weak form. Moreover evidence of significant inefficiency in both sub sample periods indicates that various reform measures after the market crash have not contributed much in the improvement of market efficiency yet. To improve the efficiency various recommendation such as reducing information asymmetry, strengthening enforcement of various rules and regulation to prevent manipulation and educating general investors etc. are suggested.

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