The Impact of Firm-Specific Factors on Share Prices of Diversified Financial Companies: Evidence from the Colombo Stock Exchange

Purpose: A nation's stock exchange is vital to its financial markets and economy. Share price fluctuations give decision-makers positive and negative signals about market performance. The study's primary goal was to determine how the share prices of various financial firms listed on the Colombo Stock Exchange (CSE) were affected. The influence of Return on Equity (ROE), Dividend per Share (DPS), Earnings per Share (EPS), Price-to-Earnings ratio (P/E), and Debt-to-Total Assets (DTA) on the share price of diverse financials was the focus of additional study objectives.
Design/Methodology/Approach: While the share price (SP) is a dependent variable, the ROE, DPS, EPS, P/E, and DTA are considered independent variables. The internal factors are considered independent variables mainly due to limited previous studies, and firm size is regarded as the controlling variable. Out of 43 Diversified Financial companies in CSE from 2013 to 2023, the top 20 were chosen as the sample based on the highest market capitalization. STATA software was used to do the analysis.
Findings: According to the findings, SP has a somewhat good association with P/E, a significant positive link with DPS and EPS, and a negative relationship with ROE, DTA, and firm size. Additionally, there is a notable difference between SP and EPS, P/E, and DTA.
Originality: Before making a choice, an investor who wants to invest in CSE and diversified financials should consider the abovementioned factors because these factors can be used to make accurate future share price estimates.