Multiple Linear Regression of the market capitalization through financial ratios of listed large cap companies on Stockholm Stock Exchange during COVID-19

Abstract: During economic cycles throughout time organizations allocate their resources in accordance with overall market dynamics, shareholder make decisions based on market dynamics as well as how well a company allocate their resources. In addition, studies of resource allocation during specific market cycles are narrow due to limited data and opportunities to study. Therefore, this thesis aims to study the relation of financial ratios to change in market capitalization during the COVID-19 pandemic with multiple linear regression. Furthermore,the impact of the key financial ratios will be examined and discussed based on their relationto the market capitalization. Financial ratios and their respective market capitalization werecollected from 251 ticker symbols defined as Nordic large cap companies by Nasdaq. From these companies, the analysis was narrowed down to only include companies listed on Stockholm Stock Exchange. The financial ratios were defined from 2020 and the change in market capitalization was defined between 2020 and 2021. Ratios that proved to be significant in the model were narrowed down to five different ratios primarily derived from a company’s assets. The final model was validated at a