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
AN EMPIRICAL ANALYSIS OF PRE AND POST MERGER OR ACQUISITION IMPACT ON FINANCIAL PERFORMANCE: A CASE STUDY OF PAKISTAN TELECOMMUNICATION LIMITED (Published)
The research of this study is to define the objectivity of merger and acquisition impact in pre and post scenario of the event. The study has played with two parts, the first part of the study implement regression model with the help of accounting ratios of profitability and long term financial position ratios with score of bankruptcy. The second part of the study just analyzes the pre and post financial ratios and its trend over the period of time. The time period taken for the selected company PTCL is from 2003 to 2009, which covers the event. The results of first part of the study has shown that profitability and long term financial position of the company is producing a strong positive impact on the firm score of bankruptcy. The second part of financial ratio has seen that after acquisition the profitability of has declined significantly and it has affected the score of the bankruptcy i.e. Z-Score. The overall long term financial position is neither improved nor declined. It has shown a constant trend over the period of time in which the data is taken. It has been conclude that performance of PTCL has not improved over the period of time
Keywords: Acquisition, Bankruptcy, Long Term Financial Position, Merger, PTCL, Profitability, Regression, Z Score
MACROECONOMIC VARIABLES AND SHARE PRICE MOVEMENTS IN NIGERIA BREWERY INDUSTRY: EVIDENCE FROM NIGERIAN BREWERIES PLC (Published)
The research aims at examining the relationship between macroeconomic variables and the movement of share prices in Nigeria brewery industry, with emphasis on Nigeria Breweries Plc; the largest beer producing brewery firm in Nigeria. The level of association of the variables is validated using the ordinary least squares method, modeled in form of multiple regression. Granger causality method was applied to examine the causality relationship among the variables in the short run. Augmented Dickey- Fuller (ADF) test was conducted on all the variables, complemented with the Phillip-Perron’s (PP) test for unit root to check for data series stationary. All the variables except interest rate had the data series differenced at second difference as a result of their unit root issues. Interest rate was however differenced at level and intercept. The result indicates a positive but insignificant relationship between share price and inflationary rate, real GDP and exchange rate while a negative and insignificant relationship is found between share price and interest rate as only 13% of the variations in share price could be explained by the independent variables. Correlation between share price and all the independent variables are positive but largely weak. Granger causality test reveals no causal relationship between share price and interest rate, inflationary rate, real GDP and exchange rate in the short run. The paper recommends that macroeconomic variables should be seriously considered in setting monetary and fiscal policies because of its multiplier effect on the economy
Keywords: Brewery, Causalities, Macroeconomics, Regression, Share Prices, policies