ACCOUNTING VARIABLES AND SHARE PRICE: AN EMPIRICAL STUDY ON QUOTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

Share price shows the strength of a business enterprise in the stock market and reflects investors’ perception to earn income in the future. Accounting variables have an impact on share price, however studies on accounting variables and share price have produced conflicting findings, necessitating additional empirical research. This study examined the relationship between accounting variables and share price of Deposit Money Banks (DMBs) quoted in Nigeria. Ex-post facto research design was employed in the study. The population of the study consisted of twenty-two (22) DMBs quoted on the Nigerian Exchange Group (NGX) as at December, 2019. Ten listed DMBs were selected using judgmental sampling technique. Data were collected from audited financial reports of the selected quoted DMBs for 10 years from 2010 to 2019. The study used descriptive and inferential statistics to analyse data. The results indicated that accounting variables without moderating effect of age and firm size impact market share price (MSP) with Adjusted R2 of 0.698, F -Statistic of 46.661 and p-value of 0.000. It was also revealed that with moderating effect of age and firm size, accounting variables significantly affect market share price with Adjusted R2 of 0.699, F-statistic of 33.896 and p-value of 0.000. The study concluded that accounting variables have significant impact on MSP of DMBs. The study recommended that Directors of DMBs in Nigeria should ensure prompt payment of dividends to shareholders and investors should use dividend per share (DPS) to predict MSP of DMBs quoted on the NGX.