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The Determinants of Financial Volatility and the Consequences to Growth of Manufacturing Firms in Malaysia

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According to the literature that has been done on the causes of volatility, it is quite evident that a number of factors, or combinations of different factors, contribute to the volatility of a company’s stock price. Past researchers have focused extensively on economy wide or firm wide variables in order to explain this phenomenon, however not much has been done on frm level determinants. The purpose of this research project is to determine the fundamental factors that affect firm level volatility in publicly listed Malaysian manufacturing firms. The paper studies the effect of three categories of variables, namely profitability, cash flow, and growth options. Pooled ordinary least squares regressions and also panel regressions are used to compute the significance of each variable. Range estimators are used to compute the volatility of the selected companies. The range estimators used are the Rogers-Satchell, Garman-Klass, and Parkinson range estimators. Results have shows that profitability and cash flow do not significantly affect firm level volatility. Growth options have shown to have a significant effect on the volatility of a company’s stock price.

Keywords: Cash Flow; Growth; Profitability; Volatility

Document Type: Research Article

Affiliations: Faculty of Business, Multimedia University, Malaysia

Publication date: May 1, 2018

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  • ADVANCED SCIENCE LETTERS is an international peer-reviewed journal with a very wide-ranging coverage, consolidates research activities in all areas of (1) Physical Sciences, (2) Biological Sciences, (3) Mathematical Sciences, (4) Engineering, (5) Computer and Information Sciences, and (6) Geosciences to publish original short communications, full research papers and timely brief (mini) reviews with authors photo and biography encompassing the basic and applied research and current developments in educational aspects of these scientific areas.
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