Effects of Internal and External Factors on Stock Returns of Large Size Firms in Nigeria

  • James A. Akwe Securities and Exchange Commission, Nigeria
  • Salisu B. Garba Central Bank of Nigeria
Keywords: Firm size, P/E ratio, MBV ratio per share, Management quality, Firm age, Interest rate, Inflation, Money supply, Stock returns


This study examines impacts of internal and external factors on stock returns of large size firms in Nigeria. Developing economies have diverse institutional and structural features when compared with advanced economies or markets. It is therefore, germane to investigate how stock returns in Nigeria behave to the combine effects of internal and external factors. The study examines the combine effects of market to book value (MBV) per share ratio, firm size, P/E ratio, management quality, firm age, interest rate, inflation, and money supply on stock returns of selected large size firms in Nigeria between 2007 and 2016. The study adopts ex-post facto as its research design. Top 25 quoted large size firms by market capitalization constitutes the population of the study. Twenty-one (21) companies that meet selection criteria forms the sample size. It uses secondary data from the CBN and NSE as well as published annual accounts. It deploys Panel data regression for the data analysis. The results indicate significant negative effects between inflation, money supply, interest rate, and stock returns of large size firms in Nigeria, while insignificant negative effect is revealed between management quality, MBV per share ratio, and stock returns in Nigeria. A further result indicates significant positive effect between firm size, firm age and stock returns in Nigeria. However, an insignificant positive effect is revealed between P/E ratio and stock returns of large size firms in Nigeria. The study recommends among others, more surveillance by the apex regulator in Nigeria (SEC), paying more attention to ratios like P/E an MBV, keeping abreast of technological changes and innovations by Board and Management of companies, enhancing corporate values through reasonable level of operating expenses; taking note of systematic risks as a result of inflation, interest rate and money supply; and intensifying capital market sensitization campaigns by the Securities and Exchange Commission. The paper adds to the existing body of knowledge on the effects of internal and external factors on stock returns of large size firms in Nigeria.


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How to Cite
Akwe, J. A., & Garba, S. B. (2019). Effects of Internal and External Factors on Stock Returns of Large Size Firms in Nigeria. Global Journal of Accounting, 5(1), 44-56. Retrieved from http://gja.unilag.edu.ng/article/view/460