Impact of Accounting Measures on Share Prices of Pharmaceutical Companies

Share price fluctuation is one of the frightening parts of making an investment. Most of the people are reluctant to make investments due to the same reason. It is a common notion that investors make profits in the market based on their luck. There is a need to change this perception. It is therefore necessary for investors to understand the factors that have an impact on the share prices of the company they have invested or planning to invest in the future. The purpose of this research is to analyze the relationship of 2 accounting variables namely Earnings Per Share (EPS) and Net Profit Margin with the share prices of pharmaceutical companies and alternatively determine if these variables possess any influence on the share prices. 9 pharmaceutical companies have been chosen to serve this purpose. After referring to numerous articles and study materials, secondary data has been collected for 5 years starting from 2013 till 2018 from and processed using SPSS to arrive at the conclusion. Comparison between the variables and share prices is carried out using Paired Samples Test. After undertaking the test, the results certified that there exists statistical evidence to prove the impact of variables. Consequently, it was concluded that the accounting variables have an impact on the share prices of the pharmaceutical companies. The results produced will help potential investors decide as to when to make their investments so as to avoid losses in the market.