Chapter 1: INTRODUCTION 1.1 Background Colombo stock exchange (CSE). This includes test for relative information content test and incremental information content test further extended analysis for the significant sectors in terms of the market capitalization also carried out under this study This study uses a sample from 238 companies listed in CSE over the 2006-2010 quarterly observations. The study is conducted on shares listed in the CSE for the period 2006-2010 due to the unavailability of

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... ata for longer period. Quantitative research method is applied using secondary data and macro economic variables, corporate events and announcements are not directly considered in this study. This research is conducted using panel data regression model with test for fixed effects and found that regression model with period fixed is significant for the Sri Lanka market for the period covered by the Study. It also found EVA does not outperform the traditional measures for the overall sample and most of the sectors and Return on Assets (ROA) as a single measure is highly significant in explaining the variation of stock market return. However there were slight differences in findings for sector wise analysis. iv Keywords and abbreviations Economic Value Added-EVA Net Income -NI Return on Assets-ROA Return on Equity-ROE Net operating profit after tax -NOPAT Operating Cash Flow -OCF Colombo Stock Exchange-CSE VA