Investment in the Sultanate of Oman 1 Investment in the Sultanate of Oman 2 EARNING PER SHARE (EPS) PER FORMANCE IN SULTANT OF OMAN. A Dissertation By AMNA GATSHAN OBAIED AL-MADHNE. ID- 2013694001 Submitted to the College of Applied Sciences Nizwa in partial fulfillment of the requirements for the degree of BACHELOR OF ACCOUNTING. SUPERVISOR Dr. Ahmed AL-Hadi Project report submitted for the degree of Bachelor of Accounting Department of International Business Administration College of Applied Sciences, Nizwa March,2019 Investment in the Sultanate of Oman 3 Table of Contents List of Tables .................................................................................................................................. 4 List of Figures ................................................................................................................................. 4 Chapter 1: Introduction ................................................................................................................... 5 1.0 Background ........................................................................................................................... 5 1.1 Objectives .............................................................................................................................. 7 1.2 Research Questions ............................................................................................................... 7 Hypothesis ................................................................................................................................... 8 1.3 Motivation ............................................................................................................................. 8 1.4 Contribution .......................................................................................................................... 8 1.5 Summary of next sections ..................................................................................................... 9 Chapter 2 Literature Review ......................................................................................................... 10 2.1 Popularity if Earning per Share ........................................................................................... 10 2.2 Limitations of Earning Per Share ........................................................................................ 11 2.3 Why Earnings per Share Matters ........................................................................................ 13 To assess the effect of EPS on MVS ............................................................................................ 21 Chapter 3: Methodology ............................................................................................................... 23 3.1 Sample ................................................................................................................................. 23 3.2 Method ................................................................................................................................ 23 3.3 Variables.............................................................................................................................. 24 Chapter 4: Results and Discussion ................................................................................................ 24 4.1 Descriptive Statistics ........................................................................................................... 25 4.2 Mean Test ............................................................................................................................ 28 4.3 Correlation ........................................................................................................................... 30 4.4 Regression ........................................................................................................................... 30 Chapter 5: Conclusion................................................................................................................... 33 Investment in the Sultanate of Oman 4 List of Tables Table 1: The table illustrates the measure of central tendency (Data Source: Muscat Stock Exchange, 2019) ........................................................................................................................... 25 Table 2: The table illustrates the measure of variation (Data Source: Muscat Stock Exchange, 2019) ............................................................................................................................................. 26 Table 3: The table illustrates the mean test (Data Source: Muscat Stock Exchange, 2019) ......... 29 Table 4: The table illustrates the Correlation between EPS and Investments (Data Source: Muscat Stock Exchange, 2019)..................................................................................................... 30 Table 5: The table illustrates the ANOVA (Data Source: Muscat Stock Exchange, 2019) ......... 31 List of Figures Figure 1: The figure illustrates the investment trend between 2010 and 2018(Data Source: Muscat Stock Exchange, 2019)..................................................................................................... 27 Figure 2: The figure illustrates the investment trend between 2010 and 2018(Data Source: Muscat Stock Exchange, 2019)..................................................................................................... 28 Investment in the Sultanate of Oman 5 Investment in the Sultanate of Oman Chapter 1: Introduction 1.0 Background Investment in Oman has been critical to the economic development and growth of the sultanate. The sultanate has embarked into practices of encouraging investment in its territory over the last four decades and has consequently transferred the benefits to the development of infrastructure and the economy in general. In so doing, the sultanate has been able to achieve sustainable development (Magd and McCoy, 2014, p. 1639). The sultanate has developed facilities and infrastructures vital for facilitating both national and foreign investment in Oman. The geographical location, as well as the availability of international and regional sea-lanes together with the existence and functionality of the Omani ports, has been critical in enhancing both local and international trade in the region. The stability of the economy and the robust infrastructure and qualified human resources has been crucial in promoting investments in the Sultanate of Oman. The sultanate has also put in place regulations that are vital in the process of opening the economic direction focused to increase the rates of foreign investments in the Sultanate (AlMaimani and Johari, 2015, p. 680). In addition, Sultanate of Oman is on the continuous search for increasing investment through entering into various trading agreements to support trade and investment in its territories. The incentive offered by the Sultanate of Oman for both foreign and local investors include the competitive pricing of services, tax exemption for the first five years upon establishment of business, individual exemption from taxes, freedom of capital and profit transfer as well as the ability to exchange foreign currency with fixed exchange rates (Mellahi et al., 2003, p 435). The investors also have full foreign property rights, availability, and excellent services for running of Investment in the Sultanate of Oman 6 operations in the Sultanate. While several advantages exist for carrying out business and investment activities in Oman, it is critical that investors determine the returns for investments to estimate the benefits from their investments. Earnings per Share Earnings per share (EPS) refers to the portion of a firm’s profits allocated for distribution to each outstanding equity share. The measure is critical as it indicates the profitability of a company and allows investors to carry put comparisons in coming up with the most profitable companies among the one, he/she wants to invest in. The ratio gives a relative earning power of various firms and is critical for investors supporting their decision-making regarding making an investment. The determination of the EPS of companies over some time is vital in determining the trends of growth or decline in the earning power of a firm and informs investor decisions regarding such companies (Hunjra et al., 2014, p. 112). It is worth noting that investors assess the EPS of potential companies for investment and would be interested in companies with growth in EPS as this is a sign of profitability. It is worth noting the EPS measure is a critical metric for investors as it critically assesses the profitability of firms. EPS is the only measure that isolates net income to determine what shareholders gain from investing in a firm. Consistency in EPS is an indication that shareholders are consistently receiving a share of a company’s profits. Additionally, the measure indicates that the company is committed to creating values for its shareholders. EPS is also an indicator of dividend payout for investors accruing from the profits of the company (Kama 2009, p. 38). Investors like the steady incomes associated with the dividend payouts from investments in various firms and companies. They also associate EPS with positive and robust growth for the company. Investment in the Sultanate of Oman 7 An association of EPS to investment is critical to the determination of investments options and growth in the Sultanate of Oman. It is essential to note that investors associate the profitability and stability of a company to an increase in EPS. The determination of the overall EPS in the Sultanate of Oman is critical in establishing the shareholder and investor options in choosing to invest in other countries in the Middle East. 1.1 Objectives The objectives of this study included: • Determining the relationship between the share prices of firms and their recorded earnings per share • Establishing whether earnings per share trends for firms affect their market performance and their ability to obtain finances in the market through equity investments. • Evaluating the growth and stability of EPS for significant firms in the Sultanate of Oman as listed in the Muscat Securities Market. • Determining if EPS is the only factor that boosts the levels of investments in the Sultanate • Evaluating factors that significantly affect the performance of firms and investments 1.2 Research Questions It is critical that the research answers various questions in a bid to determine the relationship between investment and the EPS of multiple companies in the Sultanate of Oman as listed in the country's securities exchange market. In this case, the research questions included: I. Is there any relationship between an increase in investment in a company to its Earnings per share ratio? II. Do companies have availability of information regarding the EPS posted by firms affect the operations of buying and selling of shares in the Muscat Securities Market? Investment in the Sultanate of Oman 8 III. Are investors aware of the EPS ratios of major firms in the Sultanate of Oman? IV. Do they apply this information in making investment decisions involving the acquisition of shares in the companies listed in Muscat Securities exchange? Hypothesis The study tested the following hypothesis: I. Earnings per share bear significant impact on the levels of investments in firms in the Sultanate of Oman II. The relationship between the dependent and the independent variable is an affirmative showing that the stability and growth of EPS positively affect investments in firms listed in Muscat securities. 1.3 Motivation Investment is a vital element towards a nation’s economic development and growth including the entire economy. Additionally, earning per share is indispensable in determining the profitability of shareholders investment in an organization. Therefore, the motivation to this study is attributable to the desire to understand comprehensively the role of earning per share in influencing organizations and individual’s investment in Sultanate of Oman. In fact, there is far less research in EPS performance in Oman, additionally, yet there is no research investigates EPS performance during the oil drop period in Oman. This study will fill this gap in literature. 1.4 Contribution This study finding elaborates the effect of earning per share in individual and organization investment capabilities. The relationship between earning per share and investment fosters the capacity of the organizations to have adequate insights on ways of increasing their EPS to attract more investors in their companies. In addition, the research provides adequate information to Investment in the Sultanate of Oman 9 investors, thereby helping potential investors to make informed financial decisions. This facilitates a high number of investors making investments in different enterprises, which aid in boosting Sultanate of Oman’ s economy spurring the country’s economic development and growth. Therefore, this study not only contribute to the lieterure of EPS in Oman specifically, but also provides overview to firm’s performance to investors and regulator during panic period particularly Oil dropping event. 1.5 Summary of next sections The next section encompasses the background study of EPS and Investment in Oman, including the regulation, rules, standards, and government intervention. The literature review entails a review of previous studies related to earning per share. Investment in the Sultanate of Oman 10 Chapter 2 Literature Review 2.1 Popularity of Earning per Share de Wet (2013) asserts that even today, earning per share is considered the single most significant and largely utilized financial performance benchmark in most organizations. A study conducted by Graham, Harvey, and Rajgopal (2004) revealed that the majority of the United States companies used earning per share as their financial performance measure. Accordingly, EPS has been considered crucial in making informed strategic decisions such as management performance, acquisitions and merger, incentive plans and share valuations. Earnings per share are easy to compute and easy to comprehend and, thus, in an indication of company growth when a positive EPS is recorded. Most shareholders are aware of the valuation manifold, the price to earnings ratio, which has earnings per share as the core denominator. According to Dhar and Aziza (2018), the popularity of earning per share is attributable to its ability to summarize the earnings yielded for shareholders. De Wet (2013) infers that short term earning per share performance is significant for upcoming firms for which future development and growth anticipations are sensitive likened present performance as compared to older organizations with longer business operating history. EPS and EPS growth has been considered as a critical measure for share valuation methodology. The obsessions to EPS by investors are attributed to the fact that the crucial test summarizes the earnings generated for shareholders as well as affecting the shareholders' view to both the management and the investors (Ghosh, Gu, and Jain, 2005, p. 41). The growth in EPS is critical to younger companies with future expectations of growth, and it has been established that investors assess this measure to estimate the possibility of extension for the firm essential for an enhanced return on their investments. Investment in the Sultanate of Oman 11 2.2 Limitations of Earning Per Share Failure of earning per share to reflect a company’s shareholders value creationaccording to de Wet (2013), the goal of increasing the long-term market value of an organization has its roots in over 200 years study in finance and economics. The level of risk and timing of the future free cash flows of given enterprise aid in assessing and determining shareholders value. Accordingly, equity assessment methods utilize discounted cash flows tactics to approximate the current value of organization impending cash flows. This helps in determining the present value of the shares. Organizations practically pursue the objective of value maximization by speculating in programs with returns that are above the cost of capital, thus generating a positive net present value (NPV). In addition, de Wet (2013) assert that value of generated by investing in new programs with a positive NPVs, downsizing or disinvesting in previous projects with a undesirable net present value, and enhancing or expanding existing programs with positive NPV by elevating the anticipated cash flows. It is worth noting that the association between present earning and a company future cash flow is unclear and earnings can serve in most cases, as a show of sign of positive size, uncertainty, and timing of future cash flows. De Wet (2013) infers that organizations that manage EPS are risking and to support his point, the author purports that one of the primary reasons for Enron's downfall was attributable over focusing on EPS. The fundamental issue with earning per share is the fact that an organization can take a financial decision, which elevates earning per share but ends up destroying shareholder’s value. Subsequently, obsessing on earning per share performance could cause organization management to underinvest, for example, willingly, thereby limiting vital development expenditures with the focus of meeting the quarterly earnings benchmarks. The short-term thinking and decision making ends up hindering management from making a long-term strategic decision as well as losing insights on crucial Investment in the Sultanate of Oman 12 strategic factors, such as growth and future sustainability of a company. Notably, earning per share does not consider the cost of equity and, thus, fails to reflect the full amount of running and operating a business. Organizations with large debt obligations shown in the high magnitude of financial gearing often end up having a high cost of equity because of the elevated risk. Thus, de Wet (2013) states that organizations can augment their EPS by elevating their debt, nonetheless, more debt does not create more shareholder value. Earning management – organization management does and can resort to accounting malpractice to maximize earning per share than increasing the shareholder value. According to de Wet (2013), the financial accounting issues and the manipulation of an organization earnings to a point of employing exaggerated earnings, are on the increase. For instance, referring to Enron, the author states that the firm was caught up in the vicious of earning per share management to a point that they had to utilize deceitful accounting strategies to conceal the amount of debt the firm utilized to finance the earning per share growth. Therefore, it is worth noting that the present earnings are inadequate to speculate the future earnings. Thus, investors should use more information in the financial statement, such as a balance sheet to assess the quality of a company's earnings. EPS signify the share of an organization’s earnings, preferred stock dividends, and disposable taxes, apportioned to every share of ordinary stock. Accordingly, EPS serves as a major sign of a firm's efectiveness. EPS is computed as net income minus preferred divided over average outstanding shares. Earnings per share can be computed through two methods namely the fully and basic diluted methods. The fully diluted earnings per share refer to factors in the possibly dilutive effects of stock options, warrants, and securities are convertible to common stock. Investment in the Sultanate of Oman 13 Accordingly, earnings per share can be divided according to the period involved. In addition, training earnings, current earnings, and forward earnings can evaluate profitability. 2.3 Why Earnings per Share Matters EPS is deliberated the most crucial variables in assessing the share’s price. EPS is a significant barometer to weigh a firm’s profitability per unit of shareholder ownership. Accordingly, the significant aspect of earnings per share, which is often assumed is the capital needed to yield the earnings in the computation. For example, two firms could yield the same earnings per share, but one of the company could attain this with less equity. In this case, this company would be efficient in utilizing its capital to produce income and all other factors being equal, such a company is worth investing. It is worth noting that the rate of growth of earnings per share is significant and thus may be likened between various enterprises and over a given period with the same organization. However, although earnings per share are significantly considered the most popular strategy of quantifying a company’s profitability, it is vital to remember that the earnings can be susceptible to accounting restatements and changes. Islam, Khan, Choudhury, and Adnan (2014) explain the various types of earnings per share such as the reported earnings per share also referred as GAAP EPS, ongoing EPS, and pro-Forma EPS. According to Islam, Khan, Choudhury, and Adnan (2014), earnings per share refers to the number emanated from generally accepted accounting principles (GAAP) that are stated on securities and exchange commissions. Thus, it is crucial for investors to read the information on the footnotes, thereby understanding the normal earnings as well as making adjustments in their computations. Accordingly, ongoing earnings per share are computed grounded upon normalized or continuous net income and excluding anything, which is unusual. On the other hand, pro forma earnings per share assume that presumptions are made to derive the number attained. Unlike Investment in the Sultanate of Oman 14 reported earnings, pro forma earnings per share exempt some incomes and expenses, which were utilized in computing reported earnings. Apparently, investors and shareholders consider much about market cost per share of firms and the ratios depicting them. The ratios including the earnings per share are vital in helping an investor to make informative decisions. However, according to Islam et al., (2014) an investor should not only consider using EPS to make investment decisions because earnings per share are not the only indicator. The existing literature shows a strong link between EPS and the prices of shares as well as the value of firms. It has also been determined that individual investors make investment decisions based on the current EPS of companies. EPS is considered the single most popular measure used in the evaluation of financial performance for firms (Machuga, Pfeiffer, and Verma, 2002, p. 54). It is the most critical element reported to outside stakeholders such as investors among others. As such, investors judge the performance of various firms in the market before making different investment decisions (Pushpa, and Sumangala, 2012, p. 12) have used EPS. EPS has also been associated with strategic decisions reached by the management of firms regarding wealth maximization for the benefit of stakeholders. The study on the relationship between earning and expected returns indicated that both earnings and dividends are critical in forecasting the returns from investments. It is also vital to note that studies have emphasized the importance of profits in investment decisions because of the correlation between this element and the business conditions if firms in the market (Easton et al., 2002, p. 660). While EPS has been associated with the important business condition as such as profitability and firm, value, the current study seeks to establish the connection between the EPS and the investment decisions made by investors in the Sultanate of Oman. While the sultanate Investment in the Sultanate of Oman 15 offers a conducive environment for growth and development of firms, investors have based the choice of investment options on the stability and growth of EPS. Solomon, Memba, and Muturi (2016) purport that potential and existing equity share investors utilize accounting information to make informed investment decisions. In most cases, investors often review an organization's operational profitability and financial health using accounting information, thereby, gaining insight on whether to invest or not. In their study, Solomon, Memba, and Muturi (2016) focused on analyzing the association between EPS, information variable and equity share speculation in firms listed in the Nigerian Stock Exchange. Solomon, Memba, and Muturi (2016) state that the stability, survival, and growth of an organization rely on its operating finance, often assessed using earning per share. Notably, the significance of earnings per share in the stock market is best appreciated by analyzing how earnings elaborate or affect the equity investment decisions. Apparently, investment decisions rely on the anticipations of the gains of the investment, which in turn, relies on the anticipations of future product demand and growth. Anticipations of future company growth are rounded on information on EPS. Accordingly, equity share invests usually utilize earnings per share to assess an organization’s future prospect and performance as well as to make wise investment decisions. The authors found that there existed a strong association between EPS and equity shareholder investment in firms listed in the stock exchange. Accordingly, EPS significantly influenced the equity shareholder investment in firms listed on stock exchanges and EPS is substantially utilized in accounting information thereby, helping investors to make informed investment decisions A report released by Hussein (2006) focused on investigating the factors affecting the United State Emirates investing behavior in Abu Dhabi and Dubai Financial Market. Using questionnaires with 34 items, Hussein (2006) reported that the crucial factor influencing investors Investment in the Sultanate of Oman 16 investing decisions was anticipated organization EPS. The outcome revealed that investors were most concerned with the company’s EPS since a negative EPS discouraged such investors from investing while a positive and higher EPS encouraged investors to invest in a given company. Another study by Jatoi, Shabir, Hamad, Iqbal, and Muhammad (2014) focused on investigating the impact of EPS on marker value share. Jatoi et al., (2014) state that EPS is a substantial variable in influencing the market value of shareholder equity share. Jatoi et al., (2014) found that various factors promote the market worth of the share. Apparently, among the factors taken into consideration in this study was the EPS. After conducting a correlation and a regression model, the authors found that there exists a connection between market worth of the share and EPS. The graphical presentations indicated that an increment in EPS led to an elevation in the market worth of the share. Thus, the outcome concluded that EPS influenced the market worth of the share and thus, has a significance and positive association amid the market worth of the share and EPS. Therefore, it is pivotal for investors to form a better decision and make rational and wise investment decisions on the ES variable while making investment decisions. Robbetze (2015) examined the influence of EPS on the share prices. Robbetze (2015) asserts that investment decisions are affected by various factors such as published accounting information. EPS is considered vital in accounting since it helps in indicating organization success, risk, and company performance. EPS is employed in forecasting the possible growth in future share prices. This is attributable to the fact that EPS reflects the behavior of share price. Robbetze (2015) further defines EPS as the portion of an organization’s profit allotted in every outstanding share of ordinary stock. EPS are processed by dividing the net income by the number of unpaid common shares. EPS assesses how the net income earned by a single common share. Growth in earnings per share determines the presence of future capital divided payment and reinvestment. It is worth Investment in the Sultanate of Oman 17 noting that an increase in EPS indicates a favorable effect on the value of the share and thus, creates shareholders’ wealth. Investors desire to purchase high future return and analyzing the historical earnings per share of a company to assess the future growth rates. On the other hand, earnings per share could be a depiction of risk to potential investors. Thus, investors could use EPS as a vital indicator of possible risks as well as future returns (Robbetze (2015). Accordingly, EPS is utilized in measuring organization performance. Earnings are a crucial indicator if a firm’s performance and the assessment of earnings is strongly related to stock returns. According to Robbetze (2015), shareholders utilize earnings per share to assess the stewardship by directors and managers of a company. Earnings per share are a primary accounting measurement and as stated by Robbetze (2015) EPS is linked with share prices as follows: ▪ Present earnings offer info to forecast impending earnings ▪ Earnings establish anticipations concerning prospect dividends, ▪ Earnings offer facts to assess share value, is the current value if the anticipated prospect returns. In his study, Robbetze (2015) found a solid connection amid between EPS and returns, which elaborates why accountants, the financial media, investors, and directors plane significant imperativeness of earnings data. Earnings per share aids in forecasting the real divided as well as predicting the future returns. However, EPS has some limitations, such as fraudulent manipulation by company directors and staffs. Seetharaman and Raj (2011) state that the objective an investor is to make the best possible deal when making investment decisions in shares of a given enterprise. Seetharaman and Raj (2011) assert that the return on investment is higher when the earnings per share are high as well. In their study, Seetharaman and Raj (2011) focused on investigating the effect of EPS and P/E Investment in the Sultanate of Oman 18 ratio in the potential performance of stocks. The outcome of the study revealed that the EPS had a major influence on the possible performance of the stock, which, in turn, influenced investors’ investment behaviors. Earnings per share is a crucial investment tool used in evaluating a firm’s performance either in long or short-term (Kumar, 2017). The author focused on investigating the effect of EPS on stock prices. It is apparent that EPS reflect the good or poor performance of an organization. Therefore, EPS is employed by investors to measure a company's financial performance. The author found that EPS had a significant influence on an investor's investment decision. Arguably, a negative EPS discouraged investors from investing while a positive EPS encouraged potential investors to invest in such a firm. Investment in the Sultanate of Oman 19 Study Purpose Relevant Findings Islam, M., Khan, T.R., Choudhury, T.T. Providing empirical evidence on how EPS influence the Investors and shareholders consider much about market price per share of firms as well as the and Adnan, A.M., 2014. How earning per share price movement ratios depicting them. The ratios including the earnings per share are vital in helping an share (EPS) affects share price and firm investor to make informative decisions. However, according to Islam et al., (2014) an investor value. European Journal of Business and should not only consider using EPS to make investment decisions because earnings per share Management, 6(17), pp.97-108 are not the only indicator. Solomon, A.Z., Memba, F.S. and Muturi, W., 2016. Earnings per share and equity share investment in companies listed on Nigerian stock exchange. European Journal of Business, economics, and Accountancy The significant of the study is to analyze the connection The authors found that there existed a strong association between EPS and equity shareholder between EPS, information variable and equity share investment in firms listed in the stock exchange. Accordingly, EPS significantly impacted the speculation in firms outlined in the Nigerian Stock equity shareholder investment in firms listed on stock exchanges and EPS is substantially Exchange utilized in accounting information thereby, helping investors to make informed investment decisions Hussein, A.H., 2007. Factors influencing individual investor behavior in the UAE financial markets. Journal of Business, 92(2), pp.24-26 To study the factors affecting the United State Emirates The crucial factor influencing investors investing decisions was anticipated organization EPS. investing behavior in Abu Dhabi and Dubai Financial The outcome revealed that investors were most concerned with the company’s EPS since a Market negative EPS discouraged such investors from investing while a positive and higher EPS encouraged investors to invest in a given company. Jatoi, M.Z., Shabir, G., Hamad, N., Iqbal, N. and Muhammad, K., 2014. A Regressional impact of earning per share on the market value of a share: A case study cement industry of Pakistan. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(4), pp.221-227. To study the impact of EPS on market value share There are various influences impacting the MVS (market value of share). Apparently, among the factors taken into consideration in this study was the EPS. After conducting a correlation and a regression model, the authors found that there exists a connection between market value of the share and EPS. The graphical presentations indicated that an increase in earnings per share led to an elevation in the MVS. Thus, the outcome concluded that earnings per share influenced the market worth of the share and thus, has a significance and positive association between the MVS and earning per share. Therefore, it is pivotal for investors to form a better Investment in the Sultanate of Oman 20 decision and make rational and wise investment decisions on the ES variable while making investment decisions. Robbetze, N., 2015. The Effect of Earnings Per Share Categories on the Share Prices of the Top 40 JSE Listed Companies (Doctoral dissertation, North-West University, Vaal Triangle Campus). To study the effect of EPS on the share prices EPS assesses how the net income earned by a single common share. Growth in earnings per share determines the presence of future capital divided payment and reinvestment. It is worth noting that an increase in EPS indicates a favorable effect on the value of the share and thus, creates shareholders' wealth. Investors desire to purchase high future return and analyzing the historical earnings per share of a company to assess the future growth rates. On the other hand, earnings per share could be a depiction of risk to potential investors. Thus, investors could use EPS as a vital indicator of possible risks as well as future returns (Robbetze (2015). Accordingly, EPS is utilized in measuring organization performance. Earnings is a crucial indicator if a firm's performance and the assessment of earnings is strongly related to stock returns. According to Robbetze (2015), shareholders utilize earnings per share to assess the stewardship by directors and managers of a company. Earnings per share is a primary accounting measurement and as stated by Robbetze (2015) EPS is linked with share prices as follows: Seetharaman, A. and Raj, J.R., 2011. An empirical study on the impact of earnings per share on stock prices of a listed bank in Malaysia. The International Journal of Applied Economics and Finance, 5(2), pp.114-126 Kumar, P., 2017. Impact of Earning per Share and Price-Earnings Ratio on Market Price of Share: A Study on Auto Sector in India. International Journal of Research— GRANTHAALAYAH, 5, pp.113-118 focused on investigating the effect of EPS and price The outcome of the study revealed that the EPS had a significant effect on the potential earning per share in the potential performance of stocks. performance of the stock, which, in turn, influenced investors' investment behaviors. To scrutinize the influence of EPS on the stock prices It is apparent that EPS reflect the good or poor performance of an organization. Therefore, EPS is employed by investors to measure a company's financial performance. The author found that EPS had a significant influence on an investor's investment decision. Arguably, a negative EPS discouraged investors from investing while a positive EPS encouraged potential investors to invest in such a firm. Investment in the Sultanate of Oman 21 Easton, P., Taylor, G., Shroff, P. and To utilize a predict of earnings to subsequently While EPS has been associated with the important business condition as such as profitability Sougiannis, T., 2002. Using forecasts of approximation the ROI and growth and firm, value, the current study seeks to establish the connection between the EPS and the earnings to simultaneously estimate growth investment decisions made by investors in the Sultanate of Oman. While the sultanate offers a and conducive environment for growth and development of firms, investors have based the choice the rate of return investment. Journal of on equity Accounting of investment options on the stability and growth of EPS. Research, 40(3), pp.657-676. Ghosh, A., Gu, Z. and Jain, P.C., 2005. To show that companies with a sustained elevation in The growth in EPS is critical to younger companies with future expectations of growth, and it Sustained earnings and revenue growth, earnings and revenues depict higher quality earnings has been established that investors assess this measure to estimate the possibility of extension earnings quality, and earnings response and (2) larger earnings response coefficients (ERCs) for the firm essential for an enhanced return on their investments. coefficients. Review compared to enterprises reporting sustained elevation in of accounting studies, 10(1), pp.33-57. earnings alone Machuga, S.M., Pfeiffer, R.J. and Verma, To evaluate the impact of earnings per share (EPS) in a The existing literature shows a strong link between EPS and the prices of shares as well as the K., 2002. Economic value added, future company’s performance value of firms. It has also been determined that individual investors make investment decisions accounting earnings, and financial analysts' based on the current EPS of companies. EPS is considered the single most popular measure earnings per share forecasts. Review of used in the evaluation of financial performance for firms Quantitative Finance and Accounting, 18(1), pp.59-73. Pushpa Bhatt, P. and Sumangala, J.K., 2012. Impact of Earnings per share on Market Value of an equity share: An Empirical study in Indian Capital Market. Journal of Finance, Accounting & Management, 3(2) Investors judge the performance of various firms in the market before making different To assess the effect of EPS on MVS investment decisions. EPS has also been associated with strategic decisions reached by the management of firms regarding wealth maximization for the benefit of stakeholders. Investment in the Sultanate of Oman 22 de Wet, J., 2013. Earnings per share as a To determine the impact of EPS in measuring a earnings per share is considered the single most significant and largely utilized financial measure of financial performance: does it company financial performance performance benchmark in most organizations Graham, J., Harvey, C. and Rajgopal, S., To investigate the use of EPS in measuring a company Majority of the United States companies used earning per share as their financial performance 2004. The economic implications of financial performance measure. Dhar, S. and Aziza, T., 2018. Empirical To investigate the effect of working capital management The popularity of earning per share is attributable to its ability to summarize the earnings yield Analysis on the Impact of Working Capital on earning per share for shareholders. obscure more than it reveals?. Corporate Ownership and Control/ Volume 10, Issues 4, pp.265-275. corporate financial reporting. Working paper, Duke University, Durham, NC. Management on EPS: A Panel Observation The growth in EPS is critical to younger companies with future expectations of growth, and it on the Cement Companies in Bangladesh. has been established that investors assess this measure to estimate the possibility of extension Pacific International Journal, 1(2), pp.21- for the firm essential for an enhanced return on their investments. 28. Investment in the Sultanate of Oman 23 Chapter 3: Methodology The research took into consideration companies listed in the Muscat Securities Market from different industries classification. Besides, the research involved a selection of companies based on the availability of earnings per share information that was essential to support the study into the research topic. The research took into account the secondary data available from the securities market as well as the annual reports of the firms. In addition, the study analyzes data using various analytical tools to determine the existence of the association between EPS and investment in the Sultanate of Oman. Besides, the research adopted a several analytical tools to test this relationship. 3.1 Sample A sample is a selected segment of a population for a study that bears the same characteristic as the entire population. Often, a sample in research represents the entire population in a study where population size is extremely large to cover when collecting data. In the study on EPS, the sample comprised of companies listed on the Muscat Securities Market. Notably, the number of companies listed in the Muscat Securities market is approximately 150 firms; thus, the research included a sample of 20 companies to examine the connection between EPS and investments in the selected firms. In addition, the sample collection in the study involved applied a nonprobability-sampling technique to ensure the selection of firms with the availability of investor information as well as records of investments between the years 2010 and 2018. 3.2 Method The study utilized various methods for data analysis to enhance making informed decisions and well as developing new insights regarding the association between EPS and investment. The study included both the descriptive statistics and inferential statistics essential in making supported Investment in the Sultanate of Oman 24 decisions regarding the investment in Sultanate of Oman. The descriptive analysis provided information about the mean, median, mode max and range for the EPS ratio recorded by firms in the country while the inferential statistics included the correlation and regression examination. The information provided by the inferential analysis is vital because it informs the connection between variables essential in making informed decision to either reject or fail to reject the provided research null statements. In this case, M.S. Excel was used as the statistical analysis tools in the process of analyzing the data, in a bid to make conclusions and answering the study questions. 3.3 Variables The study involves two main variables to answer the research question as well as study reject the null statement. The two elements under statistical investigation were the recorded earning per share ratio and the investment made by the shareholders in companies operating in Oman. Earnings per share ratio were the main independent variable in the study because of the research attributes influenced the EPS values. On the other hand, the variable investment was the dependent element because the study investigated whether the level of investment by the shareholders was influenced by the posted EPS by companies on the Muscat Security Market. This was essential in the process of performing the regression analysis aimed at examining whether there is an association between EPS and Investment, thereby assisting in making supported decisions about the influence of EPS on the level of investment by shareholders. Chapter 4: Results and Discussion The chapter provides the results obtained from the study and inferences made to elaborate on the study findings. This includes tables and charts that provide the visual presentation of the Investment in the Sultanate of Oman 25 findings aimed and providing an overview of the results in relation to the connection between EPS ratio and the investment by companies in the Sultanate of Oman. 4.1 Descriptive Statistics Descriptive statistics provides a quantitative summary that describes the feature of the given information in a statistical study. In research, descriptive statistics depict the measure of central tendency as well as the variation of data, depicting how far a sampled value is from the mean. The measure of central tendency is given by the mean, median and mode, while variance and standard deviation describe the measure of variation of data. The table below reveals the descriptive statistics for the total assets, basic Earnings per Share ratio recorded by the sampled companies operating in Sultanate of Oman and the corresponding amount of investment made by the enterprises in the market. Measure of Central Tendency Table 1: The table illustrates the measure of central tendency (Data Source: Muscat Stock Market, 2019) Measure of Central Tendency Total Assets Basic EPS Investment Mean 2172.81 0.02 353.86 Median 71.40 0.03 6.49 Mode 121.90 0.00 0.00 Investment in the Sultanate of Oman 26 Inferences From the table above, the sampled companies recorded an average total asset of 2172.81 Oman rials. In addition, the sampled companies depicted a basic EPS of 0.02 OMR with a total investment amount to 353.86 million OMR. Moreover, the median total assets accounted for 71.40 million OMR with a basic EPS of 0.03 OMR, while the median investment recorded by the sampled companies accounted for 6.49 million Oman rials. Measure of Variation Table 2: The table illustrates the measure of variation (Data Source: Muscat Stock Market, 2019) Measure of variation Total Assets Basic EPS Investment Standard deviation 5753.49 0.23 1158.61 Minimum 1.58 -0.92 0.00 Maximum 32579.00 2.47 10414.40 range 32577.42 3.392 10414.4 Inference From table 2 above, the companies revealed a standard deviation amount to 5753.49 million Oman Rials, 0.23 OMR basic EPS and 1158.61 million Oman Rials for total assets, basic eps and investment made by the company. In addition, the sampled companies depicted a minimum of 1.58 million OMR, -0.92 OMR and 0.00 OMR for total assets, EPS and investment respectively. A negative EPS indicates that a company is losing money invested by the shareholders while 0.00 OMR investment indicate that a company did not make any form of investment. EPS Trend between 2010 and 2018 in Sultanate of Oman Investment in the Sultanate of Oman 27 Average EPS From Year 2010 to 2018 0.14 EPS Amount In OMR 0.12 0.1 0.08 0.06 0.04 0.02 0 -0.02 2010 2011 2012 2013 -0.04 2014 2015 2016 2017 2018 Years Figure 1: The figure illustrates the investment trend between 2010 and 2018(Data Source: Muscat Security Market, 2019) Inference From the chart, the average EPS recorded by the sampled firms operating in Oman between years 2010 and 2018 depict an increasing trend between 2010 and 2012, with a corresponding decrease over the years from 2012 to 2018. Notably, the years 2010, 2011, 2017 and 2018 revealed negative earnings per share as depicted on the table above. Investment Trend between 2010 and 2018 Investment in the Sultanate of Oman 28 Average Investment between 2010 and 2018 700 Investment Amount 600 500 400 300 200 100 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Years Figure 2: The figure illustrates the investment trend between 2010 and 2018(Data Source: Muscat Security Market, 2019) Inference From the chart above, the level of investment in Sultanate of Oman has been on the rise from the year 2010 to the year 2015. However, the trend declined from the year 2016 to 2018 as depicted on the table above. 4.2 Mean Test The mean test evaluated the significance of a hypothesized mean with respect to earning per share recorded by the selected companies operating in Sultanate of Oman. From the definition, the level of investment by the shareholders to a company depends on the expected earnings per share with higher EPS making a company more attractive for investors both locally as well as internationally. One sample t-test for the recorded EPS by the sampled companies from 2010 to 2018 was used to determine the significance between the EPS and the hypothesized EPS of 5 OMR per share invested as described in the hypothetical statement below. Ho: µ ≥ 5 OMR Investment in the Sultanate of Oman 29 H1: µ < 5 OMR In a bid to reject the null supposition, the mean test used a decision rule noting that we reject the null statement if the p-value is less than α= 0.05. The table below depicts the mean test for EPS recorded by sampled companies in Oman Rials. Table 3: The table illustrates the mean test (Data Source: Muscat Stock Exchange, 2019) One Sample T-Test Count Mean Standard deviation Standard error 197 0.017 0.234 0.017 Hypothesized mean Mean difference Alpha tail Degrees of Freedom Test statistic p-value t-critical 5 -4.983 0.05 1 196 -298.67 0.0000 1.65 Inference From the table, the p-value is 0.0000 less than α= 0.05. This illustrates that there is a statistical significance; thus, we reject the null statement. Therefore, we are 95% confidence that the EPS recorded by corporates operating in Sultanate of Oman is less than five Oman Rials per share invested by the shareholders. Notably, from the table, the mean difference is -4.983 Oman rials implying that most companies are not able to return the invested amount by the shareholders per share. This is because a negative EPS indicates a loss of investments per share to the shareholders/ investors. Investment in the Sultanate of Oman 30 4.3 Correlation In research work, a correlation indicates the association between two or more variables of interest under statistical investigation, which reveals the strength, and the direction of a relationship. Table 4: The table illustrates the Correlation between EPS and Investments (Data Source: Muscat Stock Exchange, 2019) Correlation Basic EPS Basic EPS 1 Investment 0.131490205 Investment 1 Inference From the table above, the Pearson Correlational value between EPS and investment made in Sultanate of Oman is 0.1314. This indicates that there a weak positive connection between investment and the EPS recorded by firms in the country. Statistically, this implies that as the EPS increases there is a corresponding increase in the investment in a company by the shareholder by 0.131. 4.4 Regression In mathematical modeling, regression examination entails a set of statistical processes used in estimating the association between variables of interest in statistical evaluation. This includes examination between the dependent and independent elements under investigation in a statistical examination intended for developing insights and new discoveries from a data. The below depict the ANOVA analysis between EPS the independent variable and investment as the dependent element. Investment in the Sultanate of Oman 31 Table 5: The table illustrates the ANOVA (Data Source: Muscat Stock Exchange, 2019) ANOVA df SS MS F Significance F Regression 1 4466527.235 4466527.235 3.448398 0.065 Residual 196 253868432.1 1295247.102 Total 197 258334959.3 Inference The table reveals the analysis of variance for the variable EPS and investment recorded by sampled companies operating in Sultanate of Oman. From the table, the significance value is 0.065 greater than the assumed α= 0.05 at 95 % confidence level. This indicates that is no statistical significance between EPS and investment by the shareholders. Discussion Based on the statistical analysis, the earning per share, as well as the level of investing in Sultanate of Oman, is low revealing an average of 0.02 and 353.86 OMR respectively. Nonetheless, the analysis depicts that there is no association between earning per share and the level of investment by the shareholder in the country. Based on figure 1 above, the EPS recorded by companies in the country has been on the declining trend with 2018 revealing a negative average EPS, which indicated that the investors and shareholder incurred a loss on every share bought from the company. This is the opposite of the investment made in the companies operating in the country as illustrated in table 2. Notably, the companies recorded an increasing trend in the amount invested over the period, which clearly indicated that there was an association between the recorded EPS and the amount invested in a company by the shareholders. In support of the conclusion, the correlation analysis depicted a weak connection between the EPS and Investment Investment in the Sultanate of Oman 32 in the country with a Pearson value of 0.131. In addition, the regression analysis revealed that there was no statistical association between EPS and investment recorded by the companies operating in Sultanate of Oman by accepting the null statement. This implies that earning per share does not bear any significant influence of the level of investment in firms in Sultanate of Oman. Correspondingly, the association between the dependent element investment and independent variable EPS is not affirmative in revealing that the stability and growth of EPS positively affect investments in firms listed in Muscat securities. Investment in the Sultanate of Oman 33 Chapter 5: Conclusion Earnings per share and level of investment in firms are two imperative aspects that determine the success of a company with respect to how investor makes investment decisions in a company. Companies based on the profitability of a company, record both EPS and Investment attributes. Nonetheless, in Sultanate of Oman EPS recorded by companies in the country does not influence the level of investment in the companies operating in the country as depicted by the correlation and regression findings. The availability of the information regarding the EPS that a company posts in Muscat Securities Market does not influence the operation of buying and selling corporate shares in the nation. This could only imply that either most of the investors in the company are not aware of the EPS ratio as a major contributor in the investment decision-making process on corporate shares, with high EPS ratio indicating a high level of earning per a share invested by a shareholder/ investor. Thus, the EPS information is not highly applied by the investors in making decisions involving the acquisition of shares in the companies listed in Muscat Securities exchange based on research findings above. The study makes a significant contribution by informing relevant regulators and authorities regarding the level of association between EPS and level of investment which indicate no influence in the investment decision making process. This research, therefore, proposes that future study could examine the factors that contribute toward making investment decision from the shareholders and investor in Sultanate of Oman in a bid to understand the contributing factors toward investment decision making. Investment in the Sultanate of Oman 34 References AlMaimani, J. and Johari, F.B., 2015. Enhancing Active Participation of SMEs and Islamic Banks towards Economic Diversification in Oman. Procedia Economics and Finance, 31, pp.677-688 de Wet, J., 2013. Earnings per share as a measure of financial performance: does it obscure more than it reveals?. Corporate Ownership and Control/ Volume 10, Issues 4, pp.265-275. Dhar, S. and Aziza, T., 2018. Empirical Analysis on the Impact of Working Capital Management on EPS: A Panel Observation on the Cement Companies in Bangladesh. Pacific International Journal, 1(2), pp.21-28. Easton, P., Taylor, G., Shroff, P. and Sougiannis, T., 2002. Using forecasts of earnings to simultaneously estimate growth and the rate of return on equity investment. Journal of Accounting Research, 40(3), pp.657-676. Ghosh, A., Gu, Z. and Jain, P.C., 2005. Sustained earnings and revenue growth, earnings quality, and earnings response coefficients. Review of accounting studies, 10(1), pp.33-57. Graham, J., Harvey, C. and Rajgopal, S., 2004. The economic implications of corporate financial reporting. Working paper, Duke University, Durham, NC. Hunjra, A.I., Ijaz, M., Chani, D., Irfan, M. and Mustafa, U., 2014. Impact of Dividend Policy, Earning per Share, Return on Equity, Profit after Tax on Stock Prices International Journal of Economics and Empirical Research, 2(3), pp.109-115. Hussein, A.H., 2007. Factors influencing individual investor behaviour in the UAE financial markets. Journal of Business, 92(2), pp.24-26. Investment in the Sultanate of Oman 35 Islam, M., Khan, T.R., Choudhury, T.T. and Adnan, A.M., 2014. How earning per share (EPS) affects on share price and firm value. European Journal of Business and Management, 6(17), pp.97-108. Jatoi, M.Z., Shabir, G., Hamad, N., Iqbal, N. and Muhammad, K., 2014. A Regressional impact of earning per share on market value of share: A case study cement industry of Pakistan. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(4), pp.221-227. Kama, I., 2009. On the market reaction to revenue and earnings surprises. Journal of Business Finance & Accounting, 36(1‐2), pp.31-50. Kumar, P., 2017. Impact of Earning per Share and Price Earnings Ratio on Market Price of Share: A Study on Auto Sector in India. International Journal of Research—GRANTHAALAYAH, 5, pp.113-118. Machuga, S.M., Pfeiffer, R.J. and Verma, K., 2002. Economic value added, future accounting earnings, and financial analysts' earnings per share forecasts. Review of Quantitative Finance and Accounting, 18(1), pp.59-73. Magda, H.A. and McCoy, M.P., 2014. Entrepreneurship in Oman: Paving the way for a Sustainable Future. Procedia Economics and Finance, 15, pp.1632-1640. Mellahi, K., Guermat, C., Frynas, J.G. and Al‐Bortmani, H., 2003. Motives for foreign direct investment in Oman. Thunderbird International Business Review, 45(4), pp.431-446. Pushpa Bhatt, P. and Sumangala, J.K., 2012. Impact of Earnings per share on Market Value of an equity share: An Empirical study in Indian Capital Market. Journal of Finance, Accounting & Management, 3(2). Investment in the Sultanate of Oman 36 Robbetze, N., 2015. The Effect of Earnings Per Share Categories on the Share Prices of the Top 40 JSE Listed Companies (Doctoral dissertation, North-West University, Vaal Triangle Campus). Seetharaman, A. and Raj, J.R., 2011. An empirical study on the impact of earnings per share on stock prices of a listed bank in Malaysia. The International Journal of Applied Economics and Finance, 5(2), pp.114-126. Solomon, A.Z., Memba, F.S. and Muturi, W., 2016. Earnings per share and equity share investment in companies listed on Nigerian stock exchange. European Journal of Business, economics, and Accountancy 
Purchase answer to see full attachment