Abstract:
This research on “Market Efficiency and Its Impact on Share price: A Study of Listed Manufacturing
Companies in Sri Lanka.” it is designed to give some idea of the relationship between share prices and
related variables such as dividend announcement and earning etc. Qualitative approach was utilized in this
study, which is conducted by considering the Manufacturing companies. An association in the present
study EPS, Share price and dividend announcement could be observed. In this research, AAR and CAR are
analyzed based on dividend announcement and correlation and regression are used to identify the
relationship between EPS and share price. Based on the quantitative study, EPS has greater impact on
Share price. There is positive relationship between EPS and Share price. Dividend announcements aren’t
significant in pre period of announcement day. Dividend announcements are significant in post period of
announcement day. There is no signaling effect in manufacturing sector companies. The announcement of
dividend normally carries no surprise to the market. Evidence tends to conform that market reacts after the
dividend announcement. There is positive relationship between dividend announcement and share price.
This positive relationship can occur near to the dividend announcement. Informationare conveyed near to
the dividend announcement. Sample selection had to be limited because of time & data availability is
limited. If information flow is being delayed by CSE, can’t take recent year information to research purpose.
Decision of investors in selecting shares may be influenced by accounting information. But this study
considers signaling effect of EPS and dividend announcement.
