European Journal of Accounting, Auditing and Finance Research (EJAAFR)

EA Journals

Capital market

Determinant of Audit Quality in Post IFRS and 2018 Code of Corporate Governance: Evidence from Nigeria (Published)

Audit quality is an issue of great concern in dealing with the confidence and credibility crisis that has engulfed the investment scene following collapse of many firms around the world as a result of outright fraud or fraudulent financial reporting. The study used panel data approach to investigate determinant of audit quality of firms listed in Nigerian Stock Exchange. Positivist research paradigm and Ex post facto research design was adopted. Thus secondary data was collected from sample of 14 firms purposively selected from non-financial firms from 2012 to 2019 resulting to 112 firm specific observations. Audit quality measured by accrual quality developed by Dechow and Dichev 2002 is the dependent variable.  Audit fee, audit independence, audit switching, audit effectiveness (audit firm size) constitute the independent variables. Result of the study revealed that about eleven percent variation in the audit quality of sampled firms was jointly explained by the independent variables used in the study. The beta coefficient of the variables showed that audit fee, audit independence, audit switching and audit effectiveness (audit firm size) is negative but not significant in influencing accrual level. This indicates that the independent variables by reducing accrual level increases audit quality. The study concluded that audit fee, audit independence, audit switching and audit effectiveness by reducing accrual level has positive but insignificant effect on audit quality of selected firms. The study affirms Agency theory that managers opportunistic behaviour can be reduced by a third party employed by the owners. The study among other things recommended that firms should review their policies particularly as it concerns their external auditors to ensure that there are no familiarity threats, real or perceived conflict of interest that will undermine their independence in carry out their services. there is also need to enforce recent regulations toward audit firm rotation or switching after the ten years’ period specified in the 2018 Code of corporate governance in order to reduce information risk and enhance audit quality.

Keywords: Audit fee, Capital market, Determinant, IFRS, Independence, audit effectiveness, audit switching

Effect of Money Market Instruments on Capital Market Performance in Nigeria (Published)

The study examined the effect of money market instruments on capital market performance in Nigeria   using time series spanned data over a period, 1981-2018. Secondary data were sourced from the central bank of Nigeria statistical bulletin 2018. Descriptive statistics, covariance Analysis, Johansen cointegration and vector error correction model were used in the study, the study is to determine how the trading of commercial paper, Bankers’ acceptance and Treasury Bills affects capital market performance in Nigeria for the period under review. The result of the study indicates that treasury bills (TB) is negative at lags 1 and 2;  the implication is that an increase  in purchase of treasury bills in the money market would result to a fall in the annual market capitalization of the Nigerian capital market. Similarly, a negative relationship was also noticed between commercial paper (CP) trading and annual market capitalization  which implies that  an increase in trading on commercial paper will lead to a decrese in the trading of  annual capital market. However, a positive relationship was observed between bankers’ acceptance (BA) and annual market capitalization . Following the above results, the following recommendations are made. There should be adequate market information to investor in stocks to enable them transform their stock from money market to capital market depending on the market outlook. Both market (money and capital market) should ensure that they work harmoniously because investors holding one stock can cause adverse negative effect on the other.

Keywords: Capital market, Money Market, bankers’ acceptance., treasury bill

Monetary Policy and the Performance of Nigeria Capital Market: A Time Variant Analysis (Published)

This study examined the relationship between monetary policy and the performance of the Nigerian capital market using annual time series data sourced from the Central Bank of Nigeria Statistical Bulletin. The objective was to examine the long and short run relationship that exists between monetary policy variables and the performance of Nigerian capital market. Market capitalization and market turnover was modeled as the function of interest rate, exchange rate, monetary aggregates, monetary policy rate and treasury bill rate. The study applied the Ordinary Least Square (OLS) regression technique and causality, unit root, cointegration, vector error correction estimates. Findings revealed that interest rate, exchange rate monetary aggregate and monetary policy rate have positive and significant relationship with market capitalization but treasury bill rate have negative and significant relationship with market capitalization. Monetary policy rate, monetary aggregate and exchange rate have positive relationship with market turnover while Treasury bill rate and interest rate have negative and significant relationship with market turnover. The unit root test found the variables stationary at first difference, the cointergration test validates the presence of long run relationship, the granger causality test proved unidirectional causality while the vector error   correction estimates justified adequate speed of adjustment. The study concludes that monetary policy has significant relationship with performance of Nigeria capital market. We recommend that the monetary authorities should ensure effect monetary policy transmission mechanism that will enhance the performance of the capital market.

Keywords: Capital market, Exchange Rate, Monetary Policy, Time Series Monetary Policy Rate

An Assessment of the Factors That Affect the Financial Performance of the Cross-Listed Companies in the Rwanda Stock Exchange (Published)

This research study entitled An Assessment of the Factors that Affect the Financial Performance of the Cross-Listed Companies in the Rwanda Stock Exchange aimed at assessing the factors that affect the financial performance of the cross listed companies on the RSE. As a guidance, the research examined the relationship between the level of awareness of the market by the public and the financial performance of cross-listed companies in RSE, assessed how the regulation framework affect the financial performance of the cross-listed companies on the RSE feature, and finally determined how technology affects the performance of cross-listed companies. The companies under consideration were the primary stakeholder of the RSE totalling to 14 firms which included Capital Market Authority, Rwanda Stock Exchange, the 9 brokerage firms and the 3 cross listed firms in the RSE employing 97 workers. Through a descriptive survey design, a sample size of 67 participants were selected from the 97 workers and 100 other informants identified purposively and their responses to various data collection tools particularly questionnaires and interview guides captured for analysis. The data were analysed through Hermeneutics, Thematic analysis, and Multiple Regression techniques to answer the questions that the research ventured out to investigate. The result of the analysis showed that there was a negative correlation between awareness and financial performance of the firms, regulation framework was positive and significant with r (67) = .684, P = .037, while technology correlated with r = .506, p = .094. Market capitalization of the domestic companies was larger than that of cross-listed, and return on equity of the domestic firms was better than for the cross-listed companies. Generally the cross-listed companies did not perform any better than the domestic firms though overall the public awareness, technology and regulation framework positively correlated with financial performance of the cross-listed firms. The recommendation is that more awareness strategy needed to be devised so as to increase public awareness of investors and cross-listing companies need to be motivated by other factors other than making profits when choosing.

Keywords: Capital market, Financial Performance, Market Capitalization, Rwanda, profit, stock exchange


This study examined the relationship between capital market and industrial sector development in Nigeria, utilizing annual time series data covering the period from 1980 to 2012. The study adopted both descriptive and analytical methodology in its investigation. The descriptive methods were used to analyze trend performances of the variables captured in the study. The analytical methodology employed modern econometric techniques such as the unit root test, co-integration test, granger causality test and the error correction mechanism (ECM) in the estimation of the relevant relationships. The results of the co-integration test showed that there existed a long run equilibrium relationship among the variables. The results of the granger causality test as presented showed that there is a bi-directional relationship between industrial output and market capitalization and between industrial output and number of deals, but a unidirectional causality relationship running from industrial sector development to value of transaction. The results of the short run dynamics revealed that capital market has positive and significant impact on industrial output in Nigeria via market capitalization and number of deals. On the other hand, value of transaction has negative and significant impact on industrial output in Nigeria during the evaluation period. The results also showed that real gross domestic product has a positive and significant impact on industrial output in Nigeria, while exchange rate and gross domestic investment have negative and significant relationship with industrial output in Nigeria. The study therefore recommended that the government should implement appropriate reform policies aimed at ensuring efficiency in the workings of the stock market in Nigeria. Also, there is need to reduce the cost of raising capital by firms on the stock as high cost and other bureaucratic delays could limited the use of capital market as veritable source of raising funds for investment.

Keywords: Capital market, Industrial Development, Nigeria


There are elements upon which a nations’ economic development are dependent. The importance of Capital Market as one of the vehicles upon which most under-developed economies could grow cannot be overemphasized. The extent to which these economies experience the said growth is quite relative to the level of awareness and management of the market. Nigeria is not left out in the desire to maximize the gains of the capital market to boost its economy. This paper empirically examines the impact of the Nigerian Capital Market on the Nigerian economy looking at a 20 years period from 1992 to 2011. The Nigerian Capital Market was proxy as Market Capitalization against some variables of the economy such as Gross Domestic Product (GDP), Foreign Direct Investment, Inflation Rates, Total New Issues, Value of Transaction and Total Listing. Using the multiple regression analysis, we find that Capital Market has an insignificant impact on the Economy within the period under review. The study therefore advised that policies and measures that would boost investors’ confidence should be enshrined in the running of Nigerian Capital Market so that it could contribute significantly to the growth of Nigerian economy noting that all elements of the market are essential ingredients to the development of a nation.

Keywords: Capital market, Foreign Direct Investment, GDP, Inflation Rate, Total new issues, Value of Transaction, and Total listing

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