Profitability and Shareholders’ Investment of Deposit Money Banks in Nigeria

Grace U.  Nwansi; Samuel  Dibiah

doi:10.47494/mesb.v35i.1779

(1) Grace U. Nwansi Department of Finance and Banking, Federal Polytechnic Nekede, Owerri, Imo State, Nigeria
Nigeria
(2) Samuel Dibiah Department of Banking and Finance, Captain Elechi Amadi Polytechnic, Rumuola, Port Harcourt, Nigeria
Nigeria
(*) Corresponding Author

DOI:

https://doi.org/10.47494/mesb.v35i.1779

Keywords:

Profitability, Shareholders’ Investment, Return on Asset, Return on Equity, Return on Investments

Abstract

The study examined the relationship profitability and shareholder’s investment of Deposit Money Banks in Nigeria. The study was aimed determining the relationship between return on asset, return on equity, net profit margin and share price of Deposit Money Banks in Nigeria. The data was analyzed using the process of systematically applying statistical or logical techniques to describe, illustrate and evaluate data. Ordinary least square (OLS) regression statistical method was adopted in the test of hypothesis through the use of SPSS. The test of hypothesis shows that; That there is a negative and insignificant relationship between return on asset and share price of Deposit Money Banks in Nigeria, similar, a negative and insignificant relationship between return on equity and share price of Deposit Money Banks in Nigeria and furthermore, the study provides evidence of a negative and insignificant relationship between net profit margin and share price of Deposit Money Banks in Nigeria. Therefore, it is recommended that; it is suggested that further research could address other financial ratios and even for a longer period of time. A study on the combine effects of these ratios, as against the effects of individual ratios, is also recommended. The study is only on the Deposit Money Banks in Nigeria; a clearer picture would be established in other sectors in Nigeria are studied. Lastly, changes in share price are functions of many factors including macro-economic variables. This study therefore only gives a partial analysis, hence a study on a wide analysis is recommended.

Downloads

Download data is not yet available.

References

Ahmed, A.H. (2008). Errors in Databases: An examination of the CRISP Shares-Outstanding Data. Journal of Accounting Review, 69(1), 285-291

Al-Majali, G.F & Al-Assaf, K.I. (2014). Financial Management Theory and Practice. 13th Ed., South-Western Cengage Learning, Mason, OH, ISBN: 1439078106.

Anaja, D.T & Onoja, H.D. (2015). Market analysis of real estate in Nigeria. http://www.cnbothwin.com/zhishi/727799.html.2017

Bayrakdaroglu, H.T. (2017). Financial ratios as predictors of failure. Journal of Accounting Research, 19 (7), 41-57.

Berheci, H.U. (2008). Introduction to financial statement analysis. Elsevier, New Delhi , 1st edition, Chapter -03 , Ratio Analysis, .32-44

Mensah, Y.M., (2019). The differentiated bankruptcy predictive ability of specific price level adjustments. Journal of Economic Research, 19(12), 27-38.

Brigham, E.T & Houston, F.K (2001). The application of du pont analysis in the research of profitability of real estate companies. Journal of Finance and Accounting, 12(8), 93-99.

Celebi, T. G & Honig, J.L (2019). Corporate social responsibility and business ethics: Effective tools for business performance in Nigeria Banks. Interdisciplinary Journal of contemporary Research Business, 4(5), 270 – 279

CFI Education, (2015) The influence of corporate social responsibility on profit after tax of some selected deposit money banks in Nigeria. Educational Research, 4(10), 722-732. Companies and Allied Matters Decree 1990

Ekwe, D.G. (2013). Applications of classification techniques in business, banking, and finance, JAI Press, 1981.

Elakama, T.H. (2004). Zeta analysis: A new model to identify bankruptcy risk of corporations. Journal of Banking and Finance, 12(9), 29-39

Guna, H.I. & Sampurno, G.K. (2018). The causal relationship between financial decisions and their impact on financial performance. International Journal of Academic Research in Accounting, Finance and Management Sciences. 4(2), 76-84.

Lesakova, G.T (2017). The impact of market-based ratios on stock returns: the evidence from insurance sector in Turkey. International Research Journal of Finance and Economics, 84, 41-48.

Maidoki, R.U. (2013). Value relevance of accounting information in the Nigerian Stock Market. (An Unpublished Thesis, CovenantUniversity). Retrieved from http://eprints.covenantuniversity.edu.n g/685/ on January, 2013.

Manoppo, G.O & Arie, J.L. (2016). Fitting the relationship between financial variables and stock price through fuzzy regression case study: Iran Khodro company. International Journal of Business and Social Science, 2(11), 140-146.

Oyerinde, D.T. (2011). The impact of financial decisions on the profit margin of selected commercial banks in Nigeria. Unpublished Master’s Thesis. Department of Management Sciences. LAUTECH, Ogbomoso.

Manukriti, E.U (2016). Impact of selected financial variables on share prices of publicly listed firms in the Philippines. American International Journal of Contemporary Research, 2 (9), 204-213.

Moualhi, H.L. (2016.) Testing the relationship between price to earings ratio and stock returns in the Nigerian stock exchange market. International Journal of Accounting, Finance & Economics Perspectives, 12(6), 16-24

Narayan, E.G. (2014). Stock price and earning per share: A sectorial analysis with panel data. Journal of Business and Economic Review, 15(9), 23-34

Nkuhi, F.U. 2015). Stock prices and firm earning per share in Nigeria. Jorind, 11(2), 15-25.

Nwaiwu, T.K (2004). The decision to finance and its impact on company’s performance: An empirical study on a sample of companies listed on the AMMAN Stock Exchange Securities. Journal of Applied Sciences. 6(5), 1-24.

Nwiwu, R.K., Ya’u, A., Ezeocha, G.K., Ezima, G.L & Uzoigwe, T.O. (2007). The relationship among financing decisions, investment decisions, cash dividends and earnings for aggregate stock market in Taiwan and China’. Unpublished Master thesis, National Cheng Kung University, Taiwan

Okorie, T.J. (2015). Survey of corporate governance decisions. Journal of Finance, 52, 737-783.

Soludo, C. C. (2004). Consolidating the Nigerian banking industry to meet the development challenges of the 21st Century. Being an address to the special meeting of bankers committee, held on July 6.

Olamijulo, E.I. (2008). A factor analytic study of the perceived causes of small business failure. Journal of Small Business Management, 31(4), 23-31.

Om, H & Goel, T. (2017). Detecting falsified financial statement: A comparative study using multicriteria analysis and multivariate statistical techniques. The European Accounting Review 11(3), 509- 535

Pandey, H. (2015). Impact of capital structure on banking performance (A case study of Pakistan). Interdisciplinary Journal of Contemporary Research in Business . 4(1), 393-403

Rosikah, R.O. (2018). Non parametric estimates of regression quartiles and their local bahadur representation. The annals of statistics, 19(2), 760 - 777.

Saldanli, T.R (2017). Efficient capital markets: A review of theory and empirical work. Journal of Finance, 25(2), 283-317.

Srinivasan, G.T. (2012). Financial statements lost their value relevance. Journal of Accounting Research, 37 (2), 319-352.

Uwuigbe, J., Jimoh, H., & Ajayi, M.O (2012). Price earnings ratio and stock return analysis. Journal Management and Finance, 14(1), 7-12.

Yanti, K., Darmayanti, H., Yanti, Y, & Darmayanti, G. (2019). The impact of accounting information on stock prices: evidence from Athens stock exchange.

Zager, G.T & Zager, J.T (2006). Effect of financial performance indicators on market price of shares in commercial banks of Kenya. IJMBS l(3),2231-2463

Zaigham, W., Wang, E., & Ali, M. (2019). Stock return predictability with financial ratios. International Journal of Trade, Economics and Finance, 2(5) 391-399.