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The Impact of Cash Flow on Stock Price in the Banking Sector of Nigeria

Author

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  • Lyndon M. Etale

    (Department of Finance and Accountancy, Faculty of Management Sciences, Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria)

  • Paymaster F. Bingilar

    (Department of Finance and Accountancy, Faculty of Management Sciences,Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria)

Abstract

This study examined the impact of cash flow on stock price in the banking sector of Nigeria. The study adopted market price per share (MPPS) as proxy for stock price and the dependent variable, while cash flow per share ratio (CFPS), cash flow to total assets ratio (CFTA), and dividend to operating cash flow ratio (DOCF) were adopted as the independent variables. Data on the study variables for the period 2005 – 2014 were collected from the annual reports and accounts of ten commercial banks listed on the NSE. The study employed multiple regression technique based on Windows SPSS 20 version to analysis the data. The findings of the study revealed that CFPS, CFTA and DOCF had positive significant impact on MPPS. Thus, the study concluded that cash flow has positive significant impact on stock price in the banking sector of Nigeria. The study recommended that preparers of financial statements should view the statement of cash flow as an important component of the annual report, while investors should put attention on the statement of cash flow in making investment decisions.

Suggested Citation

  • Lyndon M. Etale & Paymaster F. Bingilar, 2016. "The Impact of Cash Flow on Stock Price in the Banking Sector of Nigeria," Business, Management and Economics Research, Academic Research Publishing Group, vol. 2(7), pages 136-140, 07-2016.
    • Handle: RePEc:arp:bmerar:2016:p:136-140
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    References listed on IDEAS

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    1. Agarwal, Sumit & Mohtadi, Hamid, 2004. "Financial markets and the financing choice of firms: Evidence from developing countries," Global Finance Journal, Elsevier, vol. 15(1), pages 57-70.
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    Cited by:

    1. Mohammad Ali AL Hayek, 2018. "The Relationship Between Sales Revenue and Net Profit with Net Cash Flows from Operating Activities in Jordanian Industrial Joint Stock Companies," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 8(3), pages 149-162, July.
    2. Bader M. Alsharif & Talal M. Bataineh & Khaled M. Abo Aliqah, 2021. "Cash Flows and Earnings for Share in Islamic Banks: Jordanian Evidence," International Journal of Business and Management, Canadian Center of Science and Education, vol. 15(12), pages 1-15, July.
    3. AKINTUNDE, Adewale John. & LAMBE, Isaac, Ph.D. & DANIEL, Emmanuel Kayode, Ph.D., 2024. "Effect of Management Techniques and Financial Performance of Listed Manufacturing Firms in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(2), pages 1912-1937, February.

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