Realities Versus Rhetorics: Focus Shift in Investment Decisions on the Capital Market

Abstract

This study focuses on investigating whether historical accounting data (fundamental analysis) can be totally responsible for stock performance and companies return on the Nigerian Stock Exchange. It portrays the extent to which shareholders of listed firms are influenced by various criteria in their investment decisions including reliance on the companies’ annual financial reports provided by the accounting system. The paper tries to show the impact of Behavioural finance in Nigeria Stock Market. This paper use indicators from different areas of financial Statements and Market Capitalisation such as; profitability, EPS, Book and Market value of equity, and Share prices. Also primary data from investors and stake-holders in the market was collected. Data were selected for five year period from 2013 to 2017. The sample of the study consists of five different sectors of companies listed on Nigerian Stock Exchange having five years consecutive data available. For data analysis the study used Pearson correlation technique. The study noted investors’ limited knowledge and understanding of published accounts, which consequently placed limitation on its usefulness to inform their investment decisions. The study therefore concluded that fundamental analysis alone cannot predict stock returns nor determine investors’ decision of the Nigerian listed companies. It was discovered that though relegated to the background, behavioural biases has profound significant relation with Nigerian stock market performance and listed companies on the stock exchange, hence influence investors’ decision.

Keywords: Habit, Financial-analysis, Stakeholders, Investment-decisions, Listed-companies.

DOI: 10.7176/RJFA/10-18-07

Publication date:September 30^th 2019