Relationship of Corporate Performance with Stock Returns Across Large-Cap, Mid-Cap, and Small-Cap Firms : Fresh Insights from India
Authors
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Muhammadriyaj Faniband
Assistant Professor (Corresponding Author), Symbiosis Centre for Corporate Education, Pune, Symbiosis International (Deemed University)
https://orcid.org/0000-0001-6775-3582
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Pravin Jadhav
Associate Professor, Institute of Infrastructure, Technology Research and Management (IITRAM), Ahmedabad - 380 026, Gujarat
https://orcid.org/0000-0002-5732-2217
DOI:
https://doi.org/10.17010/ijf/2025/v19i10/174258Keywords:
company performance, revenue, profit, earnings per share, stock returns, long-term relationship, causal relationships, India.JEL Classification Codes : C31, G12, L25
Publication Chronology: Paper Submission Date : November 10, 2024 ; Paper sent back for Revision : August 14, 2025 ; Paper Acceptance Date : September 25, 2025 ; Paper Published Online : October 15, 2025
Abstract
Purpose : This study investigated how company-specific factors such as net sales, net profit, and earnings per share (EPS) correlate with stock returns across large, mid, and small-cap (LMS) companies.
Design/Methodology/Approach : We employed panel cointegration and panel causality models for quarterly data between June 2010 and March 2022.
Findings : We found no evidence of long-term cointegration between company-specific factors and stock returns among LMS firms. Additionally, fluctuations in net sales and net profit were found to affect stock returns for large-cap and mid-cap companies, whereas EPS did not influence stock returns for LMS firms. Overall, the results of our cointegration and causality tests were consistent across LMS stocks.
Practical Implications : The findings have practical implications for various stakeholders. Investors can use insights from our research to make more informed decisions regarding stock investments across LMS stocks. Understanding the long-term relationship between firm performance metrics and stock returns could help in portfolio management and risk assessment.
Originality/Value : Based on our current information, this paper is the first to cover the association between firm performance and the stock returns of the mid-cap and small-cap firms, along with large-cap firms, for better investment diversification.
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References
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