Abstract:
All organizations and managers engage in increasing the value of stocks since the stock
return has a great deal with the success of the organization. Stock returns and firm
performance are two important parts of an organization. One of the most significant strength
of any corporation is its performance, which means, how an organization has financially and
non-financially performed during its operating period. Performance of firms is of vital
importance for investors, stakeholders and economy at large. Stock return is another key
factor in the decision of the stock. Stock return is generally equal to the stock price changes
and dividend paid for that stock during its operating period. The present study examines the
performance of the firm and its association with stock return for 19 Sri Lankan listed
beverage food and tobacco companies for the period of 2010 to 2014 by using convenient
random sampling for the purpose of data analysis. The hypotheses are examined with help of
Pearson's correlation and regression analysis. This study considers return on equity, return
on assets and asset turnover as independent variable and annual stock return as dependent
variable where as firm size and leverage is controlling variables. Data was collected from
listed company's annual reports and journals. Results of the study indicate that return on
assets and return on equity are positively correlated with stock return as well as firm
performance has no significant impact on stock return. The findings of the study will help
future theorists and will be useful to the academicians, practitioners and managers.
