AN EVALUATION OF SHARE PRICE DETERMINATION AND CORPORATE FIRM CHARACTERISTICS

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AN EVALUATION OF SHARE PRICE DETERMINATION AND CORPORATE FIRM CHARACTERISTICS

ABSTRACT

At the close of 2009 the total market value of 266 securities listed on the Nigerian Stock market dropped by 26.5% resulting mainly from share price losses. In effect the crux of this work was to investigate share price determination and corporate firm characteristics in a view to critically examine the significant effect corporate firm characteristics has in determining the price of shares listed on the Nigerian Stock Exchange. A panel data design was adopted using seventy-two companies from 2004-2009, a six year period which were purposively selected based on availability and adequacy of data. Due to the panel nature of the study Ordinary Least Square (OLS), fixed effect and random effect estimation technique were employed in the analysis with the use of Gretl econometric analytical tool. The result indicates that the size of the firm has the most significant effect on share price determination in the two models adapted for the study. Conclusions were made on the note that our findings provided new and additional insights in the finance literature and point to a fruitful new line of research from both a theoretical and an empirical standpoint. Hence recommendations were made in the lights that investors should be critical and objective in considering corporate firm characteristics in making investment decisions also Managements and board members should aim at improving earnings which was rated through the literature reviewed to be a major determinant of share price. This could be done by proper definitions of earnings management to avoid manipulations of accounts which most times lead to fraud.

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