The Effect of Dividend Policy on Stock Price in Nigeria.

This study examines the effect of dividend policy on market value of common stocks of firms listed on the Nigeria Stock Exchange. The study is motivated by the unsolved issue on dividend policy in the financial management. Panel data set over the period of 2010-2014 was obtained from the audited annual reports and daily stock price of the selected firms listed in the Nigeria Stock Exchange which were analyzed using pooled regression, random regression model, and fixed regression model. The results of the study revealed that payout ratio (POR) has positive effect on stock price, though not significant while earnings per share (EPS) and Size has a significant positive relationship with stock price. On other hand, leverage (LEV) has a negative effect on stock price though not significant while, market to book value (MBV) has an insignificant positive effect on stock price

Financial Intermediaries and Capital Market Development in Nigeria

This study investigates the impact of financial intermediaries on capital market development in Nigeria employing co-integration. To capture the activities of financial intermediaries, five proxies were used to explain financial intermediaries which include credit to the private sector to GDP, broad money supply and total bank savings while on the other hand, market capitalization was used to capture capital market development covering the period of 1981 to 2016. The result revealed that in the long run, credit to private sector and money supply will lead to an increase in capital market development while banks total savings and government expenditure results to a decrease in capital market development in the long run. The study recommends that the Central Bank of Nigeria should ensure that the domestic credits provided by the banking sector are directed into their appropriate uses and government expenditure be directed to productive sectors and recurrent expenditure be reduced by government. Credit facilities should also not be restricted to the large-scale manufacturing industries only, but it should also be extended to small and medium scale enterprises

The Projected Utilization of Initial Public Offer (IPO) Proceeds in Nigeria

Most young private firms use the Initial Public Offer (IPO) method to raise additional external equity fund to finance their growth and later create a secondary market for stocks. This study analysed the projected utilisation of IPO cash proceeds by Nigerian firms with a view to providing investors with information on the most critical areas that firms intend to channel those funds. The study used the cross-sectional data collected by Ilo (2012) on firms that issued IPOs from 1999 to 2009 on the Nigerian Stock Exchange (NSE). The data were analyzed using descriptive statistics such as, the means and percentage and analysis of variance. The results show that the average of IPO price is N19.09 per share. About 51% of the net proceeds is projected to be expended on business growth/ expansion and facility acquisition while 20 % is reserved for working capital needs to support the expansion. The initial investors are to enjoy a promoters’ cash-out of about 24% of the net cash raised. These projections are laudable investors should interpret the findings with caution since actual deployment of such funds may not necessarily conform with the projections except they are able to ensure adequate monitoring of the managers

FINANCIAL MARKET AND DERIVATIVES

PREFACEA derivative is said to be a security with a value that is reliant upon or derived from, anunderlying asset or group of assets asa benchmark. The derivative itself is a contractbetween two or more parties, and the derivative derives its price from fluctuations in theunderlying asset.Due to a very high degree of volatility of the financial markets, with the use of derivativeproducts, it is possible to partially or fully transfer price risks by locking-in asset prices. Allthese concepts and ways around it could not be known without a full understanding of thefinancial market and derivatives. The motive for this book, therefore, is to provide students,researchers, professionals, finance managers, and lecturers with the concepts, theories, andkey financial terms that could enhance their understanding and practice of derivative.This book covers a wide range of body of knowledge in financial derivatives; it is made upof eleven chapters which provide the readers the adequate information regarding thecontents. Apart from the numerous illustrations in each chapters, there are several end ofthe chapters' practice questions. Also, there are 192 objective questions and answerincluding, 32 practice questions and suggested solutions to stimulate reading and learning.This book on Financial Market and Derivatives, however, will serve as a great financial andresearch tool to professional students and students of various higher institutions, mostespecially postgraduate students, and at the same time a good source of financialinformation for practitioners.To buy the complete hard copy or download a full copy of this book for offline reading on a laptop, mobile phone or desktop computer.Contact:Professor Godwin Emmanuel [email protected]; [email protected]+234-8033737184, +234-8055863944</p

Determinants of firm Profitability in Nigeria: Evidence from dynamic panel models

This study examines the determinants of firm profitability for 114 firms listed on the Nigerian Stock Exchange (NSE) from 1998 to 2012, using the system Generalized Method of Moments (GMM). The results show that lagged profitability exerts significant positive effect on contemporaneous firm profitability. However, short-term leverage, inflation rate, interest rate and financial risk have significant negative effects on firm profitability. The study therefore suggests, among other recommendations, that the cost of borrowing to the real sector of the economy should be reduced in order to minimize costs of production, enhance productivity and profitability while necessary macroeconomic policies should be put in place by the government to curb inflationary pressure in the economy

Performance of mutual funds in Nigeria

The study examines the performance of 37 mutual funds distributed over six broad portfolio classes traded on the Nigerian Stock Exchange using monthly data from January 2012 to December 2015, with a view to evaluating the stock selection skills of the fund managers. Their performance was evaluated using the Sharpe and Treynor ratios and Jensen’s Alpha measure. The results showed that the market generally generated negative risk premium and the mutual fund portfolios similarly generated negative mean excess return, failing to compensate investors for investing in risky assets. The Sharpe, Treynor and Jensen’s Alpha measures showed that the funds consistently failed to provide superior risk-adjusted returns and so fund managers cannot claim to have demonstrated any form of stock selection or portfolio diversification skillEste artículo examina el rendimiento de 37 fondos de inversión, pertenecientes a seis categorías diferentes (en función del tipo de activos en el que invierten) y cotizados en la Bolsa de Valores de Nigeria, en el periodo enero 2012 – diciembre 2015, con el objetivo de evaluar la capacidad de gestión de los gestores de este tipo de fondos. Para ello se utilizan los ratios de Sharpe y Treynor y la Alfa de Jensen. Los resultados muestran que, en general, el mercado no es capaz de compensar a los inversores por el riesgo asumido en la inversión. Las ratios de Sharpe y Treynor, así como la Alpha de Jensen, muestran que, en el periodo objeto de análisis, la inversión en fondos de inversión no implica un mayor rendimiento ajustado al riesgo, es decir, los gestores de dichos fondos no han demostrado capacidad alguna de selección de activos y diversificación de cartera

The effect of firm size on performance of firms in Nigeria

This study investigates the effect of firm size on the performance of firms in Nigeria. The focus is on firm size as the modern-day phenomenon of economies of scale means this is a crucial factor in firm performance. We use a panel data set of 12 non-financial firms operating in Nigeria in the period 2005-2013. The panel data are analysed using a pooled regression model, fixed effects model and random effects model to identify the relationship between firm size and the performance of firms listed on the Nigeria Stock Exchange (NSE). Return on equity is used as a proxy for performance, which serves asthe dependent variable. Total assets and totalsales are the proxiesfor firm size, and the control variables are leverage and working capital. The results of the study reveal that firm size in terms of total assets has a negative effect on performance, while in terms of total sales, firm size has a positive effect on the performance of Nigerian non-financial companies. Meanwhile, for the control variables, a positive relationship with leverage and working capital was found. The study thus suggests that firms’ focus should be on increasing their size by boosting turnover and opening up new markets for existing and new productsEste artículo investiga el efecto tamaño en el rendimiento de las empresas nigerianas, y más específicamente se centra en valorar si el tamaño de una compañía es determinante en el mundo actual, dado el fenómeno de economías de escala imperante. Para ello utiliza un conjunto de datos panel relativo a 12 empresas no financieras cotizadas en la Bolsa de Nigeria en el período 2005-2013. La estimación de la relación entre el rendimiento de dichas compañías y su tamaño se lleva a cabo mediante un modelo de regresión con datos agrupados, un modelo de efectos fijos y un modelo de efectos aleatorios. La variable dependiente, el rendimiento, se aproxima mediante la rentabilidad sobre recursos propios, siendo los activos totales y las ventas totales las variables utilizadas para aproximar la dimensión empresarial y el grado de apalancamiento y el capital circulante las variables de control. Los resultados de esta investigación muestran que el tamaño de la empresa, medido por el total de activos, tiene un efecto negativo en el rendimiento de las empresas no financieras nigerianas, mientras que si el tamaño se aproxima por las ventas totales dicho efecto se vuelve positivo. Por lo que respecta a las variables de control, ambas tienen un efecto positivo en el rendimiento empresarial. En consecuencia, de acuerdo con los resultados obtenidos, las compañías deberían tratar de incrementar su tamaño via impulso de su volumen de negocios, así como crear nuevos mercados tanto para los productos existentes como para los nuevos productos