Announcement of accounting performance variables predictory power on share prices of listed deposit money banks in Nigeria

Abstract

The study assessed the announcement of accounting performance variable predictory power on share prices of listed Deposit Money Banks in Nigeria. The study adopted an ex-post facto research design to assess the relationship between return on equity, return on assets, price-earnings ratio, and earnings per share-on-share prices of deposit money banks in Nigeria. A sample of 12 Deposit Money Banks quoted on the Nigerian Exchange Group was selected between the years 2012 to 2021. Panel data methodology was adopted because it combines time series and cross-sectional data. The methods of data analysis were descriptive statistics, correlation, and regression techniques, and other econometric statistical analyses were adopted. The results obtained disclosed that the shares market price of DMBs and accounting performance indicators (ROE, ROA, EPS PER) are related in the long run. Additionally, Granger causality tests showed that share prices are even more predicted by the explanatory variables. Further analysis revealed that all the explanatory variables have a strong and positive correlation with the share prices of DMBs. The regression result of the study showed that return on equity and return on asset hurt the share prices of DMBs while price-to-earnings ratios and earnings per share had a positive impact on share prices. Based on the findings, the study concluded that the accounting performance indices of DMBs of Nigeria are important predictors of share price oscillations in the capital market.