The impact of designated financial variables on the share price of listed companies in Colombo stock exchange: special reference to material sector

Abstract

The study efforts to examine the influence of few selected financial factors on the share price of Material sector listed firms in Colombo Stock Exchange (CSE) for the period from 2015 to 2019. Fifteen listed companies have selected as sample of the study and the quantitative approach was selected as the research approach of the study. Secondary data was collected from the annual reports of listed companies and data was analyzed by using descriptive analysis, correlation and four regression models. The results of the study shows that there is an insignificant and negative relationship between ROA (Return on Asset) and share price and at the same time there is a significant positive relationship between gross profit ratio and share price. Furthermore, debt to equity ratio has a significant and negative relationship with the share price. Therefore financial decision makers and stock holders in their financing in order to make decisions about investment should consider only ROA (Return on Asset) instead of gross profit ratio and debt to equity ratio.