European Journal of Molecular & Clinical Medicine

Abstract

The aim of this study was to examine the relationship between stock returns and financial performance for firms listed at the Bombay Stock Exchange (BSE). The study used a descriptive research design and targeted a firm listed at the BSE. The study used only secondary data, which covered a period of 5 years from 2015 to 2019. The study also adopted correlation analysis to establish the relationship between stock return and financial performance. The results of correlation found a substantial positive correlation between stock returns and financial performance but found an insignificant positive correlation betweenstock returns and dividend payout ratio of the BSE listed firms. The study concluded that there is a direct relationship between stock returns and financial performance, hence rise in a financial performance of the listed firms increases stock returns of firms listed at the BSE. The study also concluded that shares prices and dividend payout have a direct impact on stock returns hence an increase in shares prices and dividend payout increases stock returns of listed firms. The study recommends that the management of firms listed at the BSE should strive to improve the financial performance and develop an optimal dividend payout policy, which maximizes the returns of their firms.