Abstract:
The stock price of securities is one of the most important variables for valuation. Managers are
looking for information that can assist them in predicting stock prices. This enables managers
to develop dimensions that better decisions based on accurate information on financial variables
can make the necessary. The main objective of this study is to explore the relationship between
equity price with earnings, dividends and net asset. The present study examines the impact of
Earning per share,(EPS) Dividend per share (DPS) and Net assets value per share (NAVPS)
in the formulation of stock prices on a sample of 65 companies listed on the price in Colombo
Stock Exchange (CSE) during the 2010-2014 period. The resulting evidence suggests that the
joint explanatory power of the above parameters in the formation of stock prices increases over
time. Earnings are the most widely used accounting information for investment decisions in Sri
Lanka, followed by dividends and net book value. Therefore, the study suggests that companies
should improve the quality of earnings as manipulated earnings (of which Dividends are subsets) have significant effects on share prices.
