Return On Equity : An Empirical Study

This project paper is a study on the ratio of return on equity for those companies, which are listed on the KLSE main board. Those companies, which are chosen for
this study, consisted of property, financial, consumer and industrial sectors. The result of this study shows that the return on equity for the period of 10 years
from 1987 to 1996 is 1%. The average return on equity for the properties and industrial sectors nevertheless has shown a negative return i.e. -17.17% and -6.7%,
respectively. On the other hand, the financial and consumer sectors experienced a positive turnover of 10.5% and 13.9%, respectively. Based on the return on equity for the period of 10 years, 22 companies have further
been chosen for a study to be made on the dollar performance. This time the list consisted of 7 properties companies, 3 financial companies, 4 consumer products
companies and 8 industrial products companies. Out of 18, 6 companies did not make a positive gain. Among all sectors, the finance sector had demonstrated the best positive overall performance on its dollar performance whereby 70% of the companies had indicated capital gain for more than 20%. As a conclusion, from the study, positive return on equity does not necessarily give investors a positive gain on their investment.