The Effects of Performance Evaluation Market Ratios on the Stock Return: Evidence from the Tehran Stock Exchange

ABSTRACT: The main objective of this study is to investigate the effect of performance evaluation market ratios on the stock return of companies listed in the Tehran Stock Exchange. For this purpose, a sample of 80 companies were investigated and analyzed among the companies listed in the Tehran Stock Exchange during the years 2006 to 2010. In this study is used the variables of earnings per share (EPS), price to earnings ratio (P/E) and the ratio of market value to book value of equity (M/B) to evaluate the market ratios of performance evaluation of companies. The research results indicate that earnings per share has significant and positive effects on stock return of current year, but on the stock return of future year has positive and bound line effects. Also obtained results show that the variables of price to earnings ratio and market value to book value ratio statistically have significant and negative effects on stock return of current and future year.