Review Article

A better stock pricing model: A systematic literature review

Nsama Musawa, Sumbye Kapena, Chanda Shikaputo
Journal of Economic and Financial Sciences | Vol 13, No 1 | a472 | DOI: https://doi.org/10.4102/jef.v13i1.472 | © 2020 Nsama Musawa, Sumbye Kapena, Chanda Shikaputo | This work is licensed under CC Attribution 4.0
Submitted: 30 March 2019 | Published: 01 April 2020

About the author(s)

Nsama Musawa, Department of Business Studies, Mulungushi University, Kabwe, Zambia
Sumbye Kapena, Department of Economics, Copperbelt University, Kitwe, Zambia
Chanda Shikaputo, Department of Accounting and Finance, Copperbelt University, Kitwe, Zambia


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Abstract

Background: The Fama and French five-factor model (FF5M) is one of the stock valuation model that is on the cutting edge of finance research. Results from the empirical tests from various stock markets were the FFM5 has been tested since its launch in 2014 are mixed. Hence, it is important that empirical evidence testing the FF5M in comparison with lower models such as the Fama and French three-factor model (FF3M) and the Capital Asset Pricing Model (CAPM) is documented.

Aim: To identify a research gap that still remains to be filled relating to stock valuation models in the field of finance.

Conclusion: The results of the empirical evidence have revealed that although the FF5M is a great milestone in stock pricing models, it has also left room for better models to be further developed from it in future.


Keywords

stock pricing model; Fama and French five-factor model; Fama and French three-factor model; Capital Asset Pricing Model (CAPM); systematic literature review

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