IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v8y2024i2p696-712.html
   My bibliography  Save this article

Effect of Liquidity and Profitabilty on Value Relevance of Listed Financial Companies in Nigeria

Author

Listed:
  • ABAKU Boma, FCA, FCTI.

    (Department of Accounting, Faculty of Management and Social Sciences, Base University Abuja, Nigeria)

  • Dr VERR Bernard, FCA.

    (Department of Accounting, Faculty of Management and Social Sciences, Base University Abuja, Nigeria)

  • Prof NDEM Ayara Ndiyo

    (Dean of the Faculty of Social Sciences, University of Calabar, Nigeria)

Abstract

The Nigerian financial sector has witnessed significant growth and transformation over the past decade, contributing significantly to the country’s economic progress. Consequently, this study is undertaken to examine the effect of profitability and liquidity on the value relevance of listed financial companies in Nigeria for the period of ten years 2012 to 2021. Profitability and liquidity are the independent variables while TOBIN’s Q is the proxy for value relevance as the dependent variable of the study. The debt-to-equity ratio was used as the control variable. Value Relevance theory is the theory used to underpin the work. The study adopted a quantitative research design and data for the fourty listed financial companies were sourced from the published financial statements of the companies. Multiple regression with the aid of STATA 16 application software was used in analyzing the data. The study outcome revealed that profitability and liquidity significantly affected the value relevance of listed financial companies in Nigeria. The study recommends that Management should pay more attention to profitability and liquidity as it enhances the value relevance of listed financial companies in Nigeria. The study suggests further studies to be domiciled in listed non-financial companies in Nigeria.

Suggested Citation

  • ABAKU Boma, FCA, FCTI. & Dr VERR Bernard, FCA. & Prof NDEM Ayara Ndiyo, 2024. "Effect of Liquidity and Profitabilty on Value Relevance of Listed Financial Companies 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 696-712, February.
  • Handle: RePEc:bcp:journl:v:8:y:2024:i:2:p:696-712
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-8-issue-2/696-712.pdf
    Download Restriction: no

    File URL: https://www.rsisinternational.org/journals/ijriss/articles/effect-of-liquidity-and-profitabilty-on-value-relevance-of-listed-financial-companies-in-nigeria/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. M. O. Yusuf & Christopher I. Nwufo & Emmanuel Ib Chima, 2019. "Optimum Synergy between Liquidity and Profitability Management of Quoted Banks: The Nigerian Perspective," 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. 9(2), pages 138-148, April.
    2. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
    3. Gideon Tayo AKINLEYE & Joseph Segun OGUNLEYE, 2019. "Liquidity and The Profitability of Manufacturing Firms in Nigeria," Applied Finance and Accounting, Redfame publishing, vol. 5(2), pages 68-73, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David M. Ritzwoller & Joseph P. Romano, 2019. "Uncertainty in the Hot Hand Fallacy: Detecting Streaky Alternatives to Random Bernoulli Sequences," Papers 1908.01406, arXiv.org, revised Apr 2021.
    2. Shazia Ghani, 2011. "A re-visit to Minsky after 2007 financial meltdown," Post-Print halshs-01027435, HAL.
    3. Steininger, Lea & Hesse, Casimir, 2024. "Buying into new ideas: The ECB’s evolving justification of unlimited liquidity," Department of Economics Working Paper Series 357, WU Vienna University of Economics and Business.
    4. Auer, Benjamin R., 2013. "Can habit formation under complete market integration explain the cross-section of international equity risk premia?," Review of Financial Economics, Elsevier, vol. 22(2), pages 61-67.
    5. Marco Stringa & Allan Monks, 2007. "Inter-industry contagion between UK life insurers and UK banks: an event study," Bank of England working papers 325, Bank of England.
    6. Christiane Goodfellow & Dirk Schiereck & Steffen Wippler, 2013. "Are behavioural finance equity funds a superior investment? A note on fund performance and market efficiency," Journal of Asset Management, Palgrave Macmillan, vol. 14(2), pages 111-119, April.
    7. Etienne, Xiaoli L., 2015. "Financialization of Agricultural Commodity Markets: Do Financial Data Help to Forecast Agricultural Prices?," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205124, Agricultural and Applied Economics Association.
    8. Cagli, Efe Caglar & Taskin, Dilvin & Evrim Mandaci, Pınar, 2019. "The short- and long-run efficiency of energy, precious metals, and base metals markets: Evidence from the exponential smooth transition autoregressive models," Energy Economics, Elsevier, vol. 84(C).
    9. Andrew Weinbach & Rodney J. Paul, 2009. "National television coverage and the behavioural bias of bettors: the American college football totals market," International Gambling Studies, Taylor & Francis Journals, vol. 9(1), pages 55-66, April.
    10. Plantinga, Andrew J. & Provencher, Bill, 2001. "Internal Consistency In Models Of Optimal Resource Use Under Uncertainty," 2001 Annual meeting, August 5-8, Chicago, IL 20712, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Growitsch Christian & Nepal Rabindra & Stronzik Marcus, 2015. "Price Convergence and Information Efficiency in German Natural Gas Markets," German Economic Review, De Gruyter, vol. 16(1), pages 87-103, February.
    12. Das, Prashant & Füss, Roland & Hanle, Benjamin & Russ, Isabel Nina, 2020. "The cross-over effect of irrational sentiments in housing, commercial property, and stock markets," Journal of Banking & Finance, Elsevier, vol. 114(C).
    13. Oxelheim, Lars & Rafferty, Michael, 2005. "On the static efficiency of secondary bond markets," Journal of Multinational Financial Management, Elsevier, vol. 15(2), pages 117-135, April.
    14. Baoqiang Zhan & Shu Zhang & Helen S. Du & Xiaoguang Yang, 2022. "Exploring Statistical Arbitrage Opportunities Using Machine Learning Strategy," Computational Economics, Springer;Society for Computational Economics, vol. 60(3), pages 861-882, October.
    15. Bertrand, Philippe & Lapointe, Vincent, 2015. "How performance of risk-based strategies is modified by socially responsible investment universe?," International Review of Financial Analysis, Elsevier, vol. 38(C), pages 175-190.
    16. Shi, Huai-Long & Zhou, Wei-Xing, 2022. "Factor volatility spillover and its implications on factor premia," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 80(C).
    17. Gaio, Luiz Eduardo & Stefanelli, Nelson Oliveira & Pimenta, Tabajara & Bonacim, Carlos Alberto Grespan & Gatsios, Rafael Confetti, 2022. "The impact of the Russia-Ukraine conflict on market efficiency: Evidence for the developed stock market," Finance Research Letters, Elsevier, vol. 50(C).
    18. Jezek, M., 2009. "Passive Investors, Active Traders and Strategic Delegation of Price Discovery," Cambridge Working Papers in Economics 0951, Faculty of Economics, University of Cambridge.
    19. Anastasios Evgenidis & Stephanos Papadamou, 2021. "The impact of unconventional monetary policy in the euro area. Structural and scenario analysis from a Bayesian VAR," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5684-5703, October.
    20. Nuruddeen Usman & Kodili Nwanneka & Nduka, 2023. "Announcement Effect of COVID-19 on Cryptocurrencies," Asian Economics Letters, Asia-Pacific Applied Economics Association, vol. 3(3), pages 1-4.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:8:y:2024:i:2:p:696-712. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.