Title: FINANCIAL DETERMINANTS OF MARKET VALUATION: EVIDENCE FROM TAIWANESE LISTED BANKS
Authors:
Szu-Hsien Lin, Chien-Chung Tu, Huei-Hwa Lai* and Shao-Chun Chiu
Abstract:
This study investigates the financial determinants of market valuation among Taiwanese listed banks. Using 551 bank-quarter observations collected from the Taiwan Economic Journal (TEJ) database during 2021–2025, this study examines whether profitability, earnings performance, firm size, and leverage influence market valuation measured by the price-to-book (P/B) ratio. Ordinary least squares (OLS) regression is employed to estimate the empirical model. To ensure the robustness of statistical inference, heteroskedasticity-consistent (HC3) robust standard errors are adopted. The empirical results indicate that return on assets (ROA) and firm size have positive and significant effects on market valuation, whereas leverage has a significantly negative effect. Interestingly, earnings per share (EPS) exhibit a negative association with market valuation after controlling for other financial characteristics. These findings provide useful implications for investors, bank managers, and policymakers in understanding the financial determinants of bank market valuation.
Keywords: Market valuation; Price-to-book ratio; Banking industry; Profitability; Financial leverage.
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