Dissertation for Master's Degree in Accounting

Abstract:

The purpose of this research is to investigate the impact of stock market fluctuations on the performance of companies. The desired criteria for measuring the performance of companies are return on equity (ROE) ? return on assets (ROA) ? net profit and economic added value and the desired measure for fluctuations ? monthly share of stock returns. In addition, in this research, we are looking for the relationship between company size and performance, as well as the relationship between GDP growth and performance. The sample of this research includes the cement companies present in the Tehran Stock Exchange, 15 companies were selected taking into account the desired limitations and were examined during a period of 9 years (1383-1391). The statistical method used to analyze the models in this research is the GMM method, and the results obtained are as follows:

With the increase in stock market volatility, the company's performance will decrease in all four dimensions (return on assets, return on equity, net profit and added economic value). Therefore, according to the collected information, the research hypothesis that "stock market fluctuations have a significant relationship with the performance of companies" was accepted in three cases of added value and net profit and return on assets. But the hypothesis related to ROE was not confirmed.

GDP growth has a significant relationship with company performance.

Company size has a significant relationship with company performance in terms of three indicators: return on equity, return on assets, and net profit, but this relationship is insignificant in terms of added value. Non-specific GMM method

The creation of financial markets as a part of the production factor market. Although the existence of a financial market is not a necessary condition for the creation and exchange of financial assets, financial markets are created and exchanged in the financial market By reducing the cost of searching and reducing the cost of information, it is a suitable place to direct people's stagnant savings to the production and supply of capital for companies and production institutions. Among the most important and popular financial markets in most countries are the stock markets. In these markets, company shares are traded as financial assets. The studies conducted on stock markets constitute a large part of economic research in the field of financial markets. Tehran Stock Exchange has gone through many ups and downs due to the occurrence of the Islamic Revolution and the imposed war. In a way that after about four decades of this market's activity, only in recent years (since the 70s) it has been able to provide a suitable platform for attracting capital in Iran's economy. Due to the expansion of stock markets in different regions of the country and the 44th principle of the constitution according to which the transfer of state-owned companies is done through stock markets, stock markets have become more prominent and the study of these markets has become more necessary. With the passage of time and the growth and development of financial markets and the increase of investments, many internal and external factors have affected the stock markets and have also affected their stock prices and returns, causing momentary fluctuations in them. Naturally, these momentary fluctuations will prompt the managers to invest and exchange stocks with a more conservative and accurate view.

In this thesis, we have tried to study the impact of the stock market volatility by choosing the share of monthly stock returns as an indicator for the fluctuations of the stock market, and in this way, solve many of the inefficiencies in performing analyzes related to the stock market. The topic, the statement of the problem, the purpose and reasons for choosing the topic, the importance of the research, the assumptions of the research, the scope of the research, the operational definitions of the variables, the collection of information and the limitations of the research are stated. These variables cause momentary fluctuations in the stock markets and every country will experience some of these fluctuations according to its specific economic and political conditions.Iran's stock market is not exempted from this and these fluctuations naturally affect the performance of all listed companies. Among the factors that can cause these fluctuations and subsequently affect the performance of companies are:

1. Exchange rate: Generally, an increase in the exchange rate in the short term due to the withdrawal of investors from the capital market to the money market, causes a decrease in the total index of the stock exchange, and in the long term, due to the profitability of the exporting industries, it causes the market to prosper, although in periods we witnessed the opposite in the Iranian stock market. But on the other hand, it is important to note that an increase in the exchange rate causes a decrease in the value of the national currency and, as a result, increases the costs of companies that import raw materials and equipment. For example, in 2013, the exchange rate growth of about 60% contributed to the chaotic situation of the stock market, because instead of directing liquidity and funds to the production sector, it directed funds to this parallel market and caused a decrease in the value of the national currency and economic instability, which increased the costs of companies importing raw materials and equipment.    2. Global economy: The global economy is another factor influencing the Tehran Stock Exchange. The stock price of some companies active in the Tehran Stock Exchange is directly affected by global prices, including the price of oil, minerals, metals, steel, etc.

3. Inflation rate: An increase in the inflation rate in the short term by temporarily increasing the profitability of some industries causes the market to prosper, but in the long term by increasing the operational costs of production (such as wages, energy, etc.), it has a destructive effect on the performance of companies.

In addition to the above, the openness of a country's economy and the housing situation are also known as other factors of fluctuations in the stock market of countries.

In this thesis, we have examined the effect of stock market fluctuations on the performance of companies, and we are looking for a suitable and scientific answer in a systematic way to the question, "Do stock market fluctuations have an effect on the performance of companies?"

1-3 Importance and Necessity Topic

With the business environment in the world becoming more and more competitive, as well as its penetration in Iranian markets, and considering the tremendous impact that competition has on the performance of companies, investment and the prosperity of the stock market are among the most important factors for the growth and development of countries. The existence of a coherent market enables companies to plan more effectively and be more successful in achieving their planned long-term and short-term goals. The factors that put the stock market at risk have a negative impact on the strategy of countries' goals and their progress. Giving importance to the stock market and examining the factors that make its performance associated with fluctuations makes it possible for countries to prevent or minimize the negative impact of these fluctuations on the performance of companies by accurately identifying these factors. Since the increase in volatility may increase the risk of investment and the cost of maintaining capital, and as a result, reduce investment and affect the performance of companies, it is necessary to investigate the impact of stock market fluctuations on the performance of companies, and thus understand the importance of this issue. Research

Based on the exploratory studies and the material raised and the basic question presented in the last part of the statement of the problem, the following questions can be asked:

Questions 1-4-1:

Does the volatility of the stock market have a significant relationship with the performance of the companies?

Does the growth of the gross national product (GDP) have a significant relationship with the performance of the companies?

Does the size of the company have a significant relationship with the performance of the companies? Does it?

1-4-2 Hypotheses:

According to the mentioned questions, the following hypotheses can be formulated:

1. Stock market fluctuations have a significant relationship with companies' performance.

2. The growth of gross national product has a significant relationship with the performance of companies.

3. Company size has a significant relationship with company performance.