Published Financial Statements, Equity-holders’ Investment Decisions and Bank Performance: A Study of Zenith Bank Nigeria Plc.

Abstract

This paper assessed the effects of published financial statement and equity holders’ investment decisions on firm performance in Nigeria using the Zenith Bank Nigeria Plc as a case study. The paper assumed, all things being equal, that common stockholders’ equity holding decisions (investment decisions), are born out of their abilities to read out and interpret the financial statements, either with the mind to continue to invest in the equities or to disinvest. In this case, the researcher proxy equity holder’s investment decision in the firm with shareholder funds (SHF). In other words, the shareholder’s funds, SHF, are independent of the changes or rates of growth of the firm’s profitability index, to which he (equity-holder) participates in through holding of more shares of the company. Series analysis of secondary data variables were used , and a regression model of level series and lagged differencing tests were conducted to test the hypothesis at 5% significance level. The finding is: there is a significant and positive correlation between Zenith bank’s performance and its equity holders’ investment decisions. This, in effect, shows that the knowledge, understanding and utilization of the information contained in the published financial statements of Zenith bank by its equity holders, have greatly influenced their participation in additional equity-holding of the firm, which reflected in the positive growth of the profitability of the bank within the period under consideration. The researcher recommended that regular training, in the form of seminars, workshops and conferences, be organized by the management of the banks to sustain insider investments; and adequate care and due diligence should be maintained in the preparation and publication of bank financial statements to avoid faulty equity-holder investment decisions.

Keywords: financial statement, equity-holders, investment decision, bank profitability, regression