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Determinants of stock prices during dividend announcements: an evaluation of firms' variable effects in N igeria's oil and gas sector
Author(s) -
Chiek Aik Nai,
Akpan Mfon NU
Publication year - 2016
Publication title -
opec energy review
Language(s) - English
Resource type - Journals
eISSN - 1753-0237
pISSN - 1753-0229
DOI - 10.1111/opec.12063
Subject(s) - dividend , stock (firearms) , stock exchange , stock market , economics , financial crisis , dividend yield , monetary economics , financial economics , share price , dividend policy , finance , macroeconomics , mechanical engineering , paleontology , horse , engineering , biology
The aim of this research was to analyse, statistically significant, quantitative variables that determine the share price of oil and gas sector companies listed on the N igerian Stock exchange, during the economic slowdown period of 2009–2013, after the world financial crisis of 2008, and investigate whether the signalling hypothesis holds or not. In terms of analytical tools, multiple regression analysis is used. During dividend increase announcements, the regression coefficient determinant ( R 2 ) indicates that over 90 per cent of variations in stock prices is explained by variations in dividend announcements. This study supports the dividend signalling hypothesis ( DSH ) but discredits the efficient market hypothesis. During a dividend decrease, the R 2 for both equations indicates that over 64 per cent of variations in stock prices is explained by variations in dividend announcements. This result also supports the DSH . The implication of this is that racketeers can capitalise on this and make unjustified returns. By so doing, both sector investors and the stock market will be short changed. As this research considers only the oil and gas sector, further studies need to be conducted that consider possibly all listed firms in the Nigerian stock market, within the same interval to further investigate if the signalling hypothesis will hold or not. But most appropriately, applicable, as a comparative study of the same sector before and after the world financial crisis of 2008 the paper seeks to find out if this phenomenon is also applicable to OPEC member states. This research is in progress.