Retained earnings and Firms’ Market Value: Nigeria Experience

The study examined the effects of retained earnings on market value of listed firms after controlling for earnings per share, dividend pay-out and financial leverage in the context of the Nigerian stock market. The sample data was extracted from 75 non-financial firms listed on the Nigeria stock Market during the period 2003 to 2014. The unbalanced panel data (cross-sectional and time series) used to examine the relationship was obtained from the annual financial statements of the various firms. Two basic approaches descriptive and multiple regression models were used to determine the relationship between the underlying variables. The results indicated a positive and significant relationship between retained earnings, earnings per share, dividend pay-out and value of firms while market value is positively but non-significant associated with financial leverage. The study reduces the dearth of previous research on dividend policy in emerging markets regarding the empirical relationship between retained earnings and market value of firms. Corresponding author: Akinkoye Ebenezer Yemi Email address for corresponding author: eykoye@gmail.com First submission received: 15th March 2018 Revised submission received: 20th June 2018 Accepted: 26th June 2018