Equity premium is a vital number in finance to be considered for making fund allocation and investment decisions. This study explores the relationship between (controllable) determinants of firm-level equity premium in the context of Pakistan stock market. We use a sample of 306 firms’ annual data, from 01/2001 to 6/2017, using a two-stage least-squares method to estimate our model. During the selected sample period, the average market premium of the Pakistan stock exchange (KSE100 Index) was twenty percent. The average equity premium of individual firms was only eight percent. Company fundamentals are considered determinants of firm-level equity premiums. Panel data econometrics techniques were used to estimate the modified version of the multifactor model for the Pakistan Stock Exchange. It is found that the market premium, return on equity, dividend payout ratio, accounts receivable, and firm size significantly and positively affect the firm-level equity premium. However, increase in the debt-to-equity ratio and quick ratio negatively affects that premium. The company fundamental variables are controllable for the firms and can be improved by company management to encourage investors and maximize shareholder wealth.

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企业特定因素和股权溢价的实证分析：来自巴基斯坦制造业的证据

股本溢价是财务中至关重要的数字，在制定基金分配和投资决策时应考虑这些溢价。这项研究探讨了在巴基斯坦股票市场背景下公司级股权溢价的（可控制）决定因素之间的关系。我们使用两阶段最小二乘方法对从01/2001至6/2017的306家公司的年度数据进行了抽样，以估计我们的模型。在选定的样本期内，巴基斯坦证券交易所的平均市场溢价（KSE100指数）为20％。单个公司的平均股权溢价仅为8％。公司基本面被认为是公司一级股票溢价的决定因素。面板数据计量经济学技术被用于估计巴基斯坦证券交易所多因素模型的修改版本。发现市场溢价，股本回报率，股利支付率，应收账款和公司规模对公司股票溢价产生了积极影响。但是，债务权益比率和速动比率的增加对该溢价产生负面影响。公司的基本变量对于公司而言是可控的，并且可以通过公司管理加以改善，以鼓励投资者并最大化股东财富。