Investment Ratios and Stock Returns of Deposit Money Banks in Nigeria
DOI:
https://doi.org/10.54536/ajitbae.v1i1.6735Keywords:
Book Value Per-Share, Dividend Payout Ratio, Investment Ratios, Price Earnings Ratio, StockReturnsAbstract
Financial ratios are used to analyze financial statements, to allow for meaningful understanding by stakeholders of how the firm operated in the past accounting period. The major objective of this study was to ascertain the relationship between investment ratios and stock returns of deposit money banks in Nigeria for the period 2011-2022. The study used book value per share, dividend payout ratio and price earnings ratio as independent variables. While, stock returns of deposit money banks was used as the dependent variable. The study used secondary data obtained from the financial statement of sampled banking firms and the records of Nigeria Exchange Limited (NGX) for analysis. The orthogonal deviations option of Generalized Method of Moments (GMM) technique was employed for analysis of data. Findings from the analysis showed that, book value per share, dividend payout ratio had negative and no significant relationship with stock returns of listed deposit money banks in Nigeria. However, there is a positive and significant relationship between price earnings ratio and stock returns. Therefore, the study recommends that: Deposit Money Banks to practice timely revaluation of assets and liabilities to breach the gap between book values and market values of assets and liabilities. Managers’ of firm as agents should be thorough (maintain ethics) in the report of financial statement information, while, the Nigerian Security and Exchange Commission should enforce timely disclosure with electronic/information technology platforms.
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