Tag Archives: Earnings

Financial Accounting Information Relevance and Share Prices: A Case Study of Unilever Nigeria PLC Listed on the NSE (Published)

This study examined financial accounting information relevance and share price association using Unilever Nigeria PLC, a multinational company listed on the Nigerian Stock Exchange under the consumer goods sector as a case study. The study adopted market price per share (MPS) as proxy for share price and the dependent variable, while earnings per share and dividend per share were the financial accounting data used as the independent variables. Secondary data was collected through content analysis of the published annual financial statements of Unilever Nigeria PLC for the period 2009 to 2018 and the Nigerian Stock Exchange fact book. The study employed descriptive statistics and linear regression analysis based on the ordinary least squares method as techniques for data analysis. The results of the study revealed that earnings per share (EPS) and dividend per share are not significantly related to market price per share (MPS). Based on the findings, the study concluded that financial accounting information (EPS and DPS) are not relevant for determining the market price of shares. This implies that EPS and DPS are not relevant for determining the market price of Unilever shares. The study recommended among others, that more inclusive further studies should be conducted to be able to make general inference on the subject concerning the consumer goods sector in Nigeria.

Keywords: Accounting information, Earnings, Market price, Relevance, Shares, dividend

Banks’ Characteristics and Earnings of Deposits Money Banks in Nigeria (Published)

The relevance of banking sector in an economy is defensible for the fact that it is the foremost channel of savings and its allocations to various economic units. Banks are characterized by some unavoidable variables, for this study, they are capital, loans and advances and liquidity. It is therefore assumed that banking business, especially the deposit money banks in Nigeria cannot financially perform satisfactory without these variables in place. The objective of this study is to examine the impact of these characteristics on profitability. The study adopts ex-post facto research design and secondary source data drawn from the financial statements of the selected banks were used. Regression analysis was adopted in analyzing the data. The findings of the study show that bank capital, loan and advance have a significant relationship with earnings but liquidity is not during the period of study. The study recommends that the Nigerian banks’ regulatory authorities should focus and continue to regulate banks’ capitals as necessary with a view to improving the profitability of deposit money banks in Nigeria, the management of deposit money banks, should develop credits policies that will always be in agreement with the CBN’s policies on credits and CBN should review the liquidity requirements with a view to investing idle liquidity to encourage earnings.

Keywords: Bank capital, Earnings, Liquidity, loans and advances

Effect of Dividend Policy on Shareholders Wealth in Nigeria (1987 – 2016) (Published)

The study investigated the effect of dividend policy on shareholders wealth in Nigeria between 1987 and 2016. The study adopted market price per share as proxy for shareholders’ wealth and the dependent variable; while dividend per share, earnings per share and net assets per share were used as proxies for dividend policy and the explanatory variables. Secondary time series data was collected from the annual reports of sampled 25 quoted companies for the period. The study employed descriptive statistics, the Augmented Dickey Fuller unit root test, the Johansen co-integration procedure and ordinary least squares technique based on the E-views software to examine the link between the variables. The results revealed that earnings per share and net assets per share had positive influence on market price per share, but dividend per share had negative effect on market price per share. The study also found that the predictor variables had combined effect on market price of shares, but none of them had direct independent influence in determining the price of the stock in the market. The study therefore concludes that dividend pay-out policy does not have effect on shareholders’ wealth and shareholders do not react to dividend information. Based on this finding, the study recommends that firms operating within this environment should place down on the distribution of earnings as dividend but rather focus more on the investment of retained earnings for the expansion of the business to boost growth in earnings and net assets.

Keywords: Dividend Policy, Earnings, Market price, Net assets, Shareholders Wealth

The Effect of Earnings Announcement on Share Price of Manufacturing Companies on the Ghana Stock Exchange (Published)

It has been well documented in developed Capital markets that stock prices react to earnings announcement. This research therefore investigated the effect earnings announcement on market price of manufacturing firms on the Ghana Stock Exchange. The event study methodology was adopted for this study because it examines the effect of information on stocks. With a 21 days window and a 60 day estimation period, the researchers used the Standardized Excess Return approach which corrected for most of the challenges associated with intercompany aggregation of stocks. Using the Single Index and Risk Adjusted Returns Model the study found out that earnings announcement had no effect on stock price and as such that the Ghana Stock Exchange is not efficient in the semi strong form.

Keywords: Abnormal Returns, Earnings, Efficient Market., Event Study

DOES EARNING PER SHARE DETERMINE MARKET PRICE OF ORDINARY SHARES? EVIDENCE FROM NIGERIA BANKING SECTOR (2000 – 2013) (Published)

The study aims at examining the magnitude and nature of the relationship between earnings per share and market price of ordinary shares in Nigeria banking industry from 2004 to 2013. In addition, it aims at ascertaining the impact of earnings per share on prices of ordinary shares in Nigerian banking industry. Ordinary least squares method in the form of multiple regression was applied in the analysis. Stationarity test was conducted using the Augmented Dickey- Fuller (ADF) and Phillip Perrons (PP) tests. The result reveals that earnings per share significantly and positively influence the market price of ordinary shares; with a strong and positive association too. Earnings per share also granger causes market price of ordinary shares and these characteristics are sustainable in the long run in Nigerian banking sector. The implication of the findings is that an increase in earnings has the tendency of increasing significantly the market price of shares and earnings per share is one of the key factors responsible for fluctuations in market price of ordinary shares in Nigerian banking sector. Therefore, it is pertinent for banks targeting the enhancement of their equity price to adopt workable strategies towards attracting more deposit, increasing their lending, reducing their expenditure profile and opening up other investment avenues to improve upon their earnings.

Keywords: Banks’, Earnings, Granger, Nigeria, Regression, Shares

DOES EARNING PER SHARE DETERMINE MARKET PRICE OF ORDINARY SHARES? EVIDENCE FROM NIGERIA BANKING SECTOR (2000 – 2013). (Published)

The study aims at examining the magnitude and nature of the relationship between earnings per share and market price of ordinary shares in Nigeria banking industry from 2004 to 2013. In addition, it aims at ascertaining the impact of earnings per share on prices of ordinary shares in Nigerian banking industry. Ordinary least squares method in the form of multiple regression was applied in the analysis. Stationarity test was conducted using the Augmented Dickey- Fuller (ADF) and Phillip Perrons (PP) tests. The result reveals that earnings per share significantly and positively influence the market price of ordinary shares; with a strong and positive association too. Earnings per share also granger causes market price of ordinary shares and these characteristics are sustainable in the long run in Nigerian banking sector. The implication of the findings is that an increase in earnings has the tendency of increasing significantly the market price of shares and earnings per share is one of the key factors responsible for fluctuations in market price of ordinary shares in Nigerian banking sector. Therefore, it is pertinent for banks targeting the enhancement of their equity price to adopt workable strategies towards attracting more deposit, increasing their lending, reducing their expenditure profile and opening up other investment avenues to improve upon their earnings.

Keywords: Banks’, Earnings, Granger, Nigeria, Regression, Shares