The Impact of Financial Management Decisions on Company Share Prices: A Study of Private Sector Companies in Basra

Abstract

This research has sought to investigate the impact of financial management decisions on share prices for private sector companies in Basra. The research uses quantitative data from 20 firms listed on the Basra Stock Exchange that covers a half decade (2018–2023) to assess how capital structure, represented by debt-to-equity ratio; dividend policy, as determined by the payout ratio; and profitability levels impact share prices. The relationships between these financial factors and market valuation were examined using descriptive statistics, correlation analysis, as well as multiple regression techniques. The findings suggest that the higher debt-to-equity ratio decreases stock prices, suggesting that increased leverage will increase financial risk and reduce investor confidence. On the other hand, from another corner of evidence we have high and low DIVIDEND PAY-OUT RATIO; ROE which hardly precedes with substantial progress made toward a lucrative alliance relationship i.e., that firms having greater dividends and profitability significantly command higher market value in stock prices. With an adjusted R² of 0.70, the regression model reveals that 70% of share price variability can be accounted for by these financial variables (Table A). To be sure, these findings underscore the critical necessity for private-sector Basra to exercise financial prudence. Here, companies need to work on efficiency in the capital structure and a stable dividend policy with higher profitability so that they can outperform their peer group and become more attractive for analysts. These findings offer new insights into the link between financial decision-making and firm valuation, especially in an emerging market economy.