Auditor Tenure, Audit Firm Size and Value Relevance of Accounting Information of Quoted Companies in Nigeria (Published)
The paper assesses the value relevance of the tenure of auditors and size of audit firm by using empirical data from actively traded firms on the floor of Nigerian Exchange Group. Data for the study were obtained from the published annual reports and accounts of 124 quoted companies in Nigeria between 2012 to 2021. The average -monthly share price of the fourth month after accounting year end of all sampled firms was utilized as the dependent variable of the study in order to establish the value relevance of accounting information in the financial statements, Incorporating the explanatory variables of the study (auditor tenure and control variables) into The Ohlson’s 1995 price model quantitative approaches such as descriptive statistics, correlation, and panel corrected standard errors regression analysis were used in analyzing the data for the study. Findings of the study indicate that auditor tenure and audit firm size led to significant positive influence on market reaction in the first month after the release of annual reports and accounts of sampled firms. This means that, auditor tenure and audit firm size were found to be value relevant to users of accounting information in Nigeria. The study recommends that investors should consider the audit tenure and auditors size when making investment decisions and prioritize firms that have been audited by big auditors and by integrating small audit firms, as well as firms whose audit tenure is on average of five to six years in line with International best practices, rather than ten years as stipulated by the Code of Corporate Governance and CBN.
Keywords: Audit Firm Size, Auditor Tenure, Earnings, Share Price, Value Relevance, book values, market reaction
Retained Earnings, Corporate Governance and Market-To-Book Value of Listed Firms in Nigeria (Published)
The study analysed the importance of corporate governance practices in strengthening the relationship between retention policy and firm value from 2008 – 2018. The study adopted descriptive survey design and used secondary data. The population of the study comprised of 78 listed manufacturing firms on the Nigeria Stock Exchange as at the end of 2018. Purposive sampling technique was used to select firms with up-to-date published financial data and whose stocks were traded on the stock market totaling 56. The data were analysed using table, percentages and random effect estimation techniques. Findings from the analysis indicated that corporate governance index (t = 2.155, p<0.001), earnings per share (t=5.393, p<0.001) and retained earnings per share (t=9.761, p<0.001) were positively and significantly related to the market-to-book value of firms in Nigeria. The study therefore recommends that a higher level of retained profit of these firms together with efficient management practices through good governance will affect-their values positively.
Keywords: Corporate Governance, Earnings, market-to-book., retained earnings
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
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