The influence of EPS and DPS on share price movements in Nordic tenbaggers

Abstract

This study investigates the influence of earnings per share (EPS) and dividend per share (DPS) on the share price movements of tenbaggers in the Nordic region. The term tenbagger was first coined by the famous investor Peter Lynch and it refers to shares that have generated a return of over 900 percent. The study focuses on this unique sample of companies in the Nordic region, that have been publicly listed during the last 10 years. According to the previous literature, earnings per share is one of the most significant and relevant variables when it comes to explaining and influencing share price movements, while the views on the relevance of dividends per share are a lot more fragmented. As these two variables are popular in company valuations and have been subject of previous research on share price movements, their influence is of interest to examine in the sample of Nordic tenbaggers. A quantitative method is applied with multiple linear regression models and the results show that earnings per share has had a positive significant influence on the share prices while the dividends per share results were a lot more fragmented, just like in previous research. However, on the basis of the main most comprehensive model, dividends per share was deemed not to have had a significant influence, in line with previous dividends and capital structure irrelevance theories.