How Earning Per Share (EPS) affects on share price and firm value

This article was published in European Journal of Business and Management [© 2014 European Journal of Business and Management ] and the definite version is available at : http://www.iiste.org/Journals/index.php/EJBM/article/viewFile/13572/13841 The article website is at: http://iiste.org/Journals/index.php/EJBM/article/view/13572/13841 The journal is licensed under a Creative Commons Attribution 3.0 Unported (CC BY 3.0) License.Earnings per Share (EPS) is generally considered most important factor to determine share price and firm value. Literature shows that most of the individual investors take their individual investment decision based on the EPS. This paper attempts to provide empirical evidence on how EPS affect the share price movement. We have collected and analyzed 22 scheduled banks 110 firm year data and found that share price does not move as fast as the EPS move. We also further found that the share price movement depends on micro and macro economic factors on the economy. We suggest that investors must consider other factors as well as EPS in order to invest in the security market.Publishe