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ABSTRACT
Investment in equity shares is one of the major avenues of investment that yields significant returns to investors. It is also a source of finance for the capital requirements of firms. Returns from such equity investments are subject to vary owing to the movement of share prices, which depend on various factors. Such factors that influence stock prices could be either firm specific internal factors such as earnings, dividend, book value, etc. or external factors such as interest rate, government regulations, foreign exchange rate, etc.This research paper is an attempt to analyze the impact of two specific internal factors EPS and DPS on Stock Price. The research, "impact of EPS and DPS on Stock Price: a study of selected public sector banks of India" has been carried out for the time period of2006-07 to 2014-15 (9 years) financial years of twelve selected public sector banks of India. The cause and effect relationship was checked by regression model using EViews7. Since, the time series data was employed, stationarity of the data was checked in order to avoid spurious regression. The Augmented Dickey - Fuller test was used for unit root testing to check the stationarity of the time series data. Research has disclosed a significant impact of EPS and DPS on Stock Price.
Key Words: EPS, DPS, Stock Price, NSE, Public sector banks, India.
INTRODUCTION
EARNINGS PER SHARE (EPS)
The term earnings per share (EPS) indicate the return earned per share. This ratio measures the company's shares market value. It points out whether the earning power of the company has increased or not. It symbolizes the part of a company's earnings, net of taxes and preferred stock dividend that is apportioned to each share of common stock. The figure can be computed simply by dividing net income earned in a given reporting period (usually quarterly or annually) by the total number of shares outstanding during the same term or is calculated by dividing earnings after interest, the depreciation and tax by total number of outstanding shares. It refers to the ratio of the profit after tax of the company for any financial year after payment of preference dividend (Islam, Khan, Choudhury, Adnan, 2014).
"The revenue earned by a company after meeting cost of production,...