Factors affecting share price volatility

Abstract

The stock market plays an important role in Sri Lanka’s economy. Because investors primarily focus on the price of shares as share price is a crucial factor in their investment decision. This study aims to investigate the factors that influence the share price volatility of banks listed on the Colombo Stock Exchange (CSE) of Sri Lanka. For this a sample of 24 listed banks in Sri Lanka over a six-year period from 2015 to 2021 was selected. Explanatory variables include dividend payout ratio, dividend yield, dividend per share, sales growth, leverage, exchange rate, company size, earnings volatility and GDP. Hypotheses were formulated to examine the factors that determine Share price volatility. In this study, descriptive analysis, Pearson correlation analysis, and regression analysis are used to analyze the data. Accordingly, the findings of this will offer a better understanding of the factors affecting Share Price. Findings of this study will assist policymakers, investment decision-makers, portfolio managers, and share brokers in making more profitable investment decisions, as well as provide empirical evidence for researchers interested in capital market performance.