top of page
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute

Economics and Business

Quarterly Reviews

ISSN 2775-9237 (Online)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
open access

Published: 12 July 2021

The Combined Effects of Managerial and Operational Performance of Various Fundamental Components on Stock Selection

Shamis Said Moh’d, Ravindran Ramasamy, Mohd Yaziz Mohd, Mohamed Hafidh Khalfan

Universiti Tun Abdulrazak (Malaysia), Abdulrahman Al-Sumait University (Tanzania)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

Download Full-Text Pdf



Pages: 11-33

Keywords: Fundamental Components, Managerial Performance, Operational Performance, Stock Selection, Top-down Approach


This study aims at quantifying fundamental components such as the country economy, stock market development, economic sectors, and company’s performance computed by Data Envelopment Analysis (DEA) built-in MATLAB program and combined using a top-down approach. It was conducted in the East African region specifically Kenya, Tanzania, Uganda, and Rwanda from 2015 to 2018. A secondary data extracted from the listed company’s websites, capital market authorities of each country, and World Bank. The study found that the combined performance of various components has a great impact on screening the stocks to be used for portfolio construction. It gives a signal to the authorities of capital markets, investors, policymakers, and other regulatory bodies to take immediate measures on designing policies and best practices. Further recommendation to the capital market authorities within the region is to ensure the growth of managerial and operational performance of stock exchanges. Also, regulatory bodies, policymakers, and higher-level administration of each country within the region to take responsibility to uplift the country's economy as well as economic sectors growth. The board of directors and management of listed companies should formulate strategies to improve both managerial and operational performance.


  1. African capacity building foundation (2017). Drivers of Economic Growth in Africa. Occasional Paper No, 29. Extracted on 21stMay 2020, From documents/Occasional_Paper_29_En.pdf

  2. African Development Bank (2019). African Economic Outlook 2019: Macroeconomic Performance and Prospect, Jobs, Growth, and Firm Dynamism, Integration for Africa’s Economic Prosperity. Retrieved March 6, 2020, from uploads/afdb/Documents/Publications/2019AEO/AEO_2019-EN.pdf

  3. Ahmad, E. & Malik, A. (2009). Financial Sector Development and Economic Growth: An Empirical Analysis of Developing Countries. Journal of Economic Corporation and Development, 30 (1), 17-40.

  4. Amtiran, P., Indiastuti, R. & Masyita, D. (2017). Macroeconomic Factors and Stock Returns in APT Framework. International Journal of Economics and Management, 11(1), 197-206.

  5. Atici, K. & Podinovski, V. (2015). Using data envelopment analysis for the assessment of technical efficiency of units with different specialisations: An application to agriculture, International Journal of Management Science, 54, 72-83. 2015.01.015

  6. Banker, R., Charnes, W. & Cooper, W. (1984). Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis. Management Science, 30(9), 1078-1092. Retrieved March 10, 2020, From BCC1984.pdf

  7. Baresa, S., Bogdan, S. & Ivanovic, Z. (2013). Strategy of stock valuation by fundamental analysis, UTMS Journal of Economics, ISSN 1857-6982, University of Tourism and Management, Skopje, 4 (1), 45-51

  8. Bartuseviciene, I. & Sakalyte, E.(2013). Organizational Assessment: Effectiveness Vs. Efficiency. Social Transformations in Contemporary Society, 1.

  9. Beyaz, E., Tekiner, F., Zeng, X. & Kean, J. (2018). Stock Price Forecasting Incorporating Market State. IEEE 20thInternational Conference on High Performance Computing and Communicating; IEEE 16th International Conference on Smart City; IEE   4Tth International Conference on Data Science and Systems. https://10.1109/ HPCC/SmartCity/DSS.2018. 00263

  10. Biau, C. (2018). Common Capital Market Infrastructure for East Africa: Options for the Way Forward. Milken Institute.

  11. Bonga, W. (2015). The Need for Efficient Investment: Fundamental Analysis and Technical Analysis.

  12. Bright Africa (2018). Investing Africa. Extracted on 20thmay 2020, From media/ 2221/bright_africa_report_2018.pdf

  13. Chenery, H. B., & Syrquin, M. (1975). Patterns of Development 1950-70. Oxford UP.

  14. Deliktas, E. & Gunal, G. (2016). Economic Growth and Input use Efficiency in Low, Upper-Middle and High Incomed Countries (1991-2011): A Data Envelopment Analysis. Istanbul Conference of Economics and Finance, ICEF 2015, Procedia Economic and Finance, 38, 308-317.

  15. Dong, J., Zhu, L., Wang, B., Dong, Z. & Li, X. (2016). The Evaluation of Financing Efficiency of China’s Stock Market. Mathematical Problem in Engineering, 1-14.

  16. Drakopoulou, V. (2015). A Review of Fundamental and Technical Stock Analysis Techniques. Journal of Stock and Forex Trading, 5(1), 1-8.

  17. Edirisinghe, N. & Zhang, X. (2010). Input/output selection in DEA under expert information, with application to financial markets. European Journal of Operational Research 207, 1669–1678. 10.1016/j.ejor.2010.06.027

  18. Elhusseiny, M., Michieka, N. & Bae, B. (2019). An Empirical Examination of the Arbitrage Pricing Theory: Evidence from U.S. Stock Market. Journal of Modern Accounting and Auditing, 15(2), 69-79.

  19. El-Wassel, K. (2013). The Development of Stock Market: In Search of Theory. International Journal of Economics and Financial Issues, 3(3), 606-624.

  20. Eze, G. (2019). Measurement of Liquidity Effects on Stock Market Returns Using Market Capitalization Ratio – Study of Zenith Bank Nigeria Plc. International Journal of Economics and Financial Management, 4910, 1-7.

  21. Fama, F., & French, R. (2014). A Five-Factor Asset Pricing Model. Journal of Financial Economics 116, 1-22.

  22. French, J. (2017). Macroeconomic Forces and Arbitrage Pricing Theory. Journal of Comparative ASIAN Development, 16(1), 1-20.

  23. Gabriel, M., Semion, E. & Akpoede, I. (2016). The Application of Arbitrage Pricing Theory (APT) in the Nigeria Capital Market. IIARD International Journal of Banking and Finance Research, 2(1), 32-45.

  24. Graham, B., & Dodd, D. (1934). Security Analysis. New York: Whittlesey House, McGraw-Hill Book Co.

  25. Guerard, J., Markowitz, H. & Xu, G. (2015). Earnings Forecasting in a Global Stock Selection Model and Efficient Portfolio Construction and Management, International Journal of Forecasting, 31, 550-560. j.ijforecast.2014.10.003

  26. Heston, S. L. and K. G. Rouwenhorst (1994). Does industrial structure explain the benefits of international diversification? Journal of Financial Economics 36(1), 3–27.

  27. Hussin, F. & Ching, C. (2013). The Contribution of Economic Sectors to Economic Growth: The Case of Malaysia and China. International Journal of Academic Research in Economics and Management Science, 2(2), 1-13.

  28. Jakpar, S., Tinggi, M., Tak, A. and Yi, C.  (2018). Fundamental Analysis Vs Technical Analysis: The Comparison of Two Analysis in Malaysia Stock Market. UNIMAS Review of Accounting and Finance , 1(1), 38-61.

  29. Jothimani, D., Shankar, R. & Yadav, S. (2017). A PCA-DEA framework for stock selection in Indian stock market. Journal of Modelling in Management, 12(3), 386-403.

  30. Jumanne, B. (2018). Ownership Concentration And Corporate Performance In East African Community (Eac): The Role Of Technical Efficiency On Foreign Ownership Among Publicly Listed Companies. PhD Thesis, Universiti Tunku Abdul Rahman. Extracted on 24thMay 2020, From performance_in_East_African_community_(EAC)_The_role_of_technical_efficiency_on_foreign_ownership_among_publicly_listed_companies.pdf

  31. Juozapaitis, E. &Stasytytė, V. (2015). Theoretical aspects of fundamental analysis. KSI Transactions nn Knowledge Society, 8(1). Extracted on 14thMay 2020, From

  32. Kabrt, T. (2015). The Relationship between Discounts and Premiums and Value Investing Theory, Procedia Economics and Finance 25, 220 – 226

  33. Kimani, M., Aduda, J. & Mwangi, M. (2017). The Effect of Portfolio Size on The Financial Performance of Portfolios of Investment Firms in Kenya. American Journal of Finance,1(2), 1 – 15.

  34. Kok, U-W., Ribando, J. & Sloan, R. (2017). Facts about Formulaic Value Investing. Financial Analyst Journal, 73(2).

  35. Kulkarni, K. & Kulkarni, G. (2013). Fundamental Analysis Vs. Technical Analysis: A Choice Of Sectoral Analysis. International Journal of Engineering and Management Science, 4 (2), 234-246.

  36. Kumar, S. & Gulati, R. (2008). An Examination of Technical, Pure Technical, and Scale Efficiencies in Indian Public Sector Banks using Data Envelopment Analysis. Eurasian Journal of Business and Economics 2008, 1 (2), 33-69. Retrieved March 10, 2020, From EJBE2008Vol01No02p33KUMAR-GULATI.pdf

  37. Kuo, K., Lu, W. & Dinh, T. (2020). An Integrated Efficiency Evaluation of China Market. Journal of the Operational Research Society.

  38. Kuvshinov, D. & Zimmermann, K. (2018). The Bing Bang: Stock Market Capitalization in the Long Run. European Historical Economics Society, EHES Working papers in Economic History, No. 136.

  39. Kuznets, S. (1966). Modern economic growth: rate, structure and spread. Yale University Press, London.

  40. Kuznets, S. (1979). Growth, population, and income distribution: Selected essays. Norton, New York

  41. Lankauskiene, T. & Tvaronaviciene, M. (2013). Economic Sector Performance and Growth: Contemporary Approaches in the Context of Sustainable Development. Intellectual Economics, 7(3), 355-374.

  42. Lee, C. (2014). Value Investing: Bridging Theory and Practice. China Accounting and Finance Review, 16 (2), 10-38.

  43. Lewis, W. A. (1954). Economic development with unlimited supplies of labor. Manchester School of Economic and Social Studies, 22 (2), 139-91.

  44. Li, X. & Sullivan, R. (2011). A Dynamic Future of Active Quant Investing. Journal of Portfolio Management,

  45. Lim, S., Oh, K. & Zhu, J. (2014). Use of DEA Cross-efficiency evaluation in Portfolio Selection: An Application to Korea Stock Market, European Journal of Operational Research, 361-368. j.ejor.2013.12.002

  46. Lim, S., Oh, K. & Zhu, J. (2014). Use of DEA cross-efficiency evaluation in portfolio selection: An application to Korean stock market. European Journal of Operational Research, 236, 361–368.

  47. Loncarskia,1. & Skocir, M. (2018). Multi-factor asset pricing models: factor construction choices and the revisit of pricing factors. Journal of International Financial Markets, Institutions and Money, 55, 65-80.

  48. Ma, L., Ausloos, M., Schinckus, C. & Chong, H. (2018). Fundamental Analysis in China: An Empirical Study of the Relationship Between Financial Rations and Stock Prices. Theoretical Economics Letters, 8, 3411-3437.

  49. Maria, I. & Sanchez, G. (2007). Evaluating the effectiveness of the Spanish police force through data envelopment analysis. European Journal of Law and Economics, 23, 43-57.

  50. Markwat, T., Dijk, D., Swinkels, L. & Zwart, G. (2008). The Economic Value of Fundamental and Technical Information in Emerging Currency Markets. ERIM Report Series Reference No. ERS-2007-096-F&A, EFA 2008 Athens Meetings Paper. Extracted from =1088222

  51. Mashayekhi, Z. & Omrani, H. (2016). An integrated multi-objective Markowitz–DEA cross-efficiency model with fuzzy returns for portfolio selection problem, Journal of Applied Soft Computing, 38, 1-9.

  52. Mohammad, S. & Ali, G. (2018). The Relationship Between Fundamental Analysis and Stock Returns Based on the Panel Data Analysis: Evidence from Karachi Stock Exchange (KSE). Research Journal of Finance and Accounting, 9(3), 84-96.

  53. Navas, S. & Bentes, R. (2013). The Fundamental Analysis: An Overview. International Journal of Latest Trends in Finance & Economic Sciences, 3 (1). Extracted on 14thMay 2020, From

  54. Nazarko, J. Chodakowska, E. (2015). Measuring productivity of construction industry in Europe with Data Envelopment Analysis, Operational Research in Sustainable Development and Civil Engineering – meeting of EURO working group and 15th German-Lithuanian-Polish colloquium (ORSDCE 2015). Procedia Engineering, 122, 204 – 212.

  55. Ndiritu, G. & Mugivane, F. (2015). Factors leading to slow growth in listed firms on Stock Markets in the East Africa Region: The case of Nairobi Security Exchange (NSE). Prime Journal of Business Administration and Management, 5(7), 1886-1890. Extracted on 25thMay 2020, From

  56. Norge Bank (2019). Country and Industry Effect s in Global Equity Returns. Discussion note, 01/2019.

  57. OECD/FAO (2016), “Agriculture in Sub-Saharan Africa: Prospects and challenges for the next decade”, in OECD-FAO Agricultural Outlook 2016-2025, OECD Publishing, Paris. 10.1787/agr_outlook-2016-5-en

  58. Onoh, J., Ukeje, O. & Nkama, N. (2017). Trading Volume and Market Turnover in The Nigerian Capital Market: Implications to Stock Market Returns. IIRAD International Journal of Economics and Business Management, 3(1), 91-107.

  59. Onyuma, S., Mugo,R. &  Karuiya, J. (2012). Does Cross-Border Listing (Still) Improve Firm Financial Performance in Eastern Africa. Journal of Business, Economic and Finance, 1(1), 92-109.

  60. Otuteye, E., & Siddiquee, M. (2015). Avoiding Financially Distressed Companies Using a Value Investing Heuristic. The Journal of Investing, 24(3), 73–99. https//: joi.2015.24.3.073

  61. Oyetayo, O. & Adeyeye, P. (2017). A Robust of the Arbitrage Pricing Theory: Evidence from Nigeria. Journal of Economic and Behavioral Studies, 9(1), 141-151.

  62. Ozkan, S. & Ayan, T. (2017). Efficiency Analysis Based on the Correlation Between National Income and Social-economic Development Level in OECD Countries. International Journal of Economic and Administrative Studies, 20, 253-266.

  63. Page, J. (2016). Industry in Tanzania: Performance, Prospect and Public Policy. WIDER Working Paper 2016/5, United Nations University. Extracted on 21stMay 2020, From sites/default/files/wp2016-5.pdf

  64. Petrusheva, N. & Jordanoski, I. (2016). Comparative Analysis Between The Fundamental and Technical Analysis of Stocks. Journal of Process Management – New Technologies, International, 4(2), 1-6.

  65. Pinjaman, S. & Aralas, S. (2017). Firm Level Stock Returns Volatility in Malaysia: A Sectoral Study. Proceeding of International Conference on Economics (1CE 2017), 24-42.

  66. Raubenheimer, H. (2018). African Capital market: Challenges and Opportunities. CFA Institute Research Foundation. Extracted on 21stMay 2020, From https://www.cfainstitute. org/-/media/documents/article/rf-brief/rf-african-capital-markets. ashx

  67. Saeed, S. & Hassan, A. (2018). Inter-linkages Between Liquidity and Stock Returns: An Empirical Investigation Through Panel Cointegration. Pakistan Journal of Commerce and Social Sciences, 12(2), 617-637.

  68. Sharma, D. (2018). Stock Market Performance and Efficiency of Banks in a Developing Economy: Evidence From the Indian Banking Sector. IIM Kozhikode Society & Management Review, 7(2), 1-16.

  69. Shen, K. & Tzeng, G. (2015). Combined Soft Computing Model for Value Stock Selection based on Fundamental Analysis, Journal of Applied Soft Computing, 37, 142 – 155. j.asoc.2015.07.030

  70. Skare, M. & Rabar, D. (2016). Measuring Economic Growth Using Data Envelopment Analysis. Amfiteatru Economic Journal, 18(42), 386-406.

  71. Souza, M., Ramos, D., Pena, M., Sobreiro, V. & Kimura, H. (2018). Examination of the profitability of technical analysis based on moving average strategies in BRICS. Financial Innovation, 4 (3), 1-18. /s40854-018-0087-z

  72. Sukcharoensin, P. & Sukcharoensin, S. (2013). The Analysis of Stock Market Indicators: Evidence From The ASEAN-5 Equity Market. International Journal of Trade, Economics and Finance, 4(6), 343-346.

  73. Tahamipour, M. & Mahmoudi, M. (2018). The Role of Agricultural Sector Productivity in Economic Growth: The Case of Iran’s Economic Development Plan. Research in Applied Economics, 10(1), 16-24.

  74. Tandon, D. & Walia, N. (2015). A Sector wise Empirical Analysis of Risk-Return Relationship. International of Journal of Management Research & Review, 5(7), 588-593.

  75. Tarczynski, W. & Tarczyńska-Łuniewska, M. (2018). The construction of fundamental portfolio with the use of multivariate approach, 22nd International Conference on Knowledge-Based and Intelligent Information & Engineering Systems, Procedia Computer Science 126, 2085–2096. 2018.07.243

  76. Tasnim, N. & Afzal, M. (2018). An Empirical Investigation of Country level Efficiency and National System of Entrepreneurship using Data Envelopment Analysis (DEA) and Tobit Model. Journal of Global Entrepreneurship Research, 8(37), 1-17. /s40497-018-0138-y

  77. Waworuntu, S. & Suryanto, H. (2010). The Complementary Nature of Fundamental and Technical Analysis: Evidence from Indonesia. Journal of Management Business, 3 (2), 167-184.

  78. Wong, W. & Deng, Q. (2016). Efficiency analysis of banks in ASEAN countries, Benchmarking: An International Journal, 23(7 ), 1798 – 1817.

  79. Yang, W., Shi, J., Shao, W. & Wang, S. (2017). Regional Technical Efficiency of Chines Iron and Steel Industry Based on Bootstrap Network Data Envelopment Analysis. Socio-Economic Planning Sciences, 57, 14-24.

  80. Yannick, G., Hongzhong, Z. & Thierry, Z. (2016). Technical efficiency assessment using data envelopment analysis: an application to the banking sector of Côte d’Ivoire, 12th International Strategic Management Conference, ISMC 2016, 28-30 October 2016, Antalya, Turkey. Procedia - Social and Behavioral Sciences, 235, 198 – 207. j.sbspro.2016.11.015.

  81. Yannicka, G., Hongzhongb, Z. & Thierry, B. (2016). Technical efficiency assessment using data envelopment analysis: an application to the banking sector of Côte d’Ivoire, 12th International Strategic Management Conference, ISMC 2016, 28-30 October 2016, Antalya, Turkey. Procedia - Social and Behavioral Sciences, 235, 198 – 207.

  82. Yartey, C. (2008). The Determinants of Stock Market Development in Emerging Economies: Is South Africa Different? International Monetary Fund Working Paper, African Development, WP/08/32.

  83. Yi, R., Chang, Y., Xing, W. & Chen, J. (2019). Compare Relative Efficiency Between Two Stock Markets. Quarterly Review of Economics and Finance,

bottom of page