Impact Of Firms’ Performance On Returns: Large-cap Vs Small-cap Stocks

This study explores the connection between a company's performance and the returns on its stocks specifically looking at both large-cap and small-cap stocks. While earlier studies mainly focused on large-cap stocks there is a growing interest among analysts in investigating smaller-cap stocks because of their characteristics and greater potential for growth. Motivation for this research stems from an increased interest and recognition of small-cap stocks' opportunities, especially their unique dynamics, and factors that drive stock returns in this segment. Knowing these dynamics and factors becomes crucial for capitalizing on potential high-growth opportunities while optimizing portfolios. This study aims to bridge the existing research gap by examining the connection between performance indicators and returns specifically focusing on the small-cap shares. It seeks to provide insights, for investors and financial practitioners to make decisions and improve their decision-making processes.