Determinants of Stock Price Movement in Nigeria: (Evidence from the Nigerian Stock Exchange)

Abstract

Stock prices serve as the basis for the assessment of whether a firm is breaking even or not. These prices are relevant metrics of returns to stakeholders, therefore the value attached to them matters so much to both existing and prospective investors in the capital market. This study thus examined by a means of robust analysis, factors that determine stock price movement in Nigeria for the period 2001 – 2011. Data were sourced from the financial statements of 99 listed firms in the Nigerian Stock Exchange. The analysis of the data sourced was done with the Ordinary Least Square (OLS) method.  The results suggest that earnings per share, book value per share and dividend cover serve as factors in the determination of stock prices.  The results of the study thus calls for recommendation that the government and policy makers in Nigeria should implement more stringent rules, backed up by legislations that will enhance the information reported in the financial statements of firms listed on the Nigeria Stock Exchange as well as compelling listed firms to adopt IFRS. Also, the accounting information reported in the capital market should constantly reposition itself in response to changing expectations. This implies that it should be viewed as an open system and in other words, feedback both from within and outside its environment should drive the constant repositioning of accounting information.

Keywords: Earnings Per Share; Dividend Per Share; Book Value Per Share; Stock Market;