Title: Understanding undervalued vs. non-undervalued stocks from the firm characteristics perspective: the case of Malaysia

Authors: Irene Wei Kiong Ting; Noor Azlinna Azizan; Premjit Singh; Qian Long Kweh

Addresses: Faculty of Industrial Management, Universiti Malaysia Pahang, Lebuhraya Tun Razak, 26600 Gambang, Kuantan Pahang, Malaysia ' College of Business Administration, Prince Sultan University, P.O. Box 53073, Riyadh, 11586, KSA ' ExxonMobil Business Support Centre Malaysia Sdn. Bhd., 18th Floor, Menara ExxonMobil, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia ' Faculty of Management, Canadian University Dubai, P.O. Box 117781, 1st Interchange, Sheikh Zayed Road, Dubai, United Arab Emirates

Abstract: From the perspective of firm characteristics, this study explores the determinants of the performance of undervalued stocks compared with that of non-undervalued stocks over a ten-year period (2006-2015). The performance of these stocks is significantly and positively affected by operating cash flow, and firm performance decreases along with increasing debt. In this case, both undervalued and non-undervalued tasks should monitor the level of their leverage. These results provide a novel understanding of undervalued stocks and help investors identify firm characteristics that can improve stock performance. These results may also guide firm managers in aligning undervalued or non-undervalued stocks with the characteristics of their firms. The new perspectives offered by this study on the other determinants of stock performance can also benefit future scholars in this field.

Keywords: stock performance; firm characteristics; undervalued stocks; non-undervalued stocks; Malaysia.

DOI: 10.1504/IJBEX.2024.140343

International Journal of Business Excellence, 2024 Vol.33 No.3, pp.372 - 392

Received: 02 Sep 2020
Accepted: 24 Mar 2021
Published online: 05 Aug 2024 *

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