Nexus Between Financial Performance and Stock Investment Decisions: Evidence from Palestine

Authors

Ibrahim Mohammad Ateeq, Dina Issa Smirat

 

Abstract

This study aimed to examine the relationship between financial performance and equity investment decisions in companies listed on the Palestine Stock Exchange. The results of a study conducted on 42% of the companies listed on the Palestine Stock Exchange, revealed a decline in the financial performance of these companies since the outbreak of the COVID-19 pandemic and the October 7, 2023 war. The study demonstrated a positive impact of financial performance, measured by both return on equity and the dividend payout ratio, on the stock trading price alone. It also demonstrated a positive impact of return on assets and the dividend payout ratio on trading volume. It also proved no statistically significant impact of governance indicators, measured by the number of board of directors and the number of board meetings, on equity trading volume and price. It is recommended that company managements must seriously adhere to governance principles for improving financial performance and gain investors’ confidence. A positive governmental intervention to assist companies in facing economic and political shocks with stimulating impacts on investment environment must be adopted.

DOI: 10.51958/AAUJBL2026V10I2P3