Financing Policy and Share Prices of Quoted Manufacturing Firms in Nigeria: A Multi-Variant Study
Vol.6 Issue 2
This study examined the relationship between investment policy and dynamic of stock prices of quoted manufacturing firms in Nigeria. Panel data of 15 quoted manufacturing firms was collected from the annual reports of the manufacturing firms from 2010-2019. Stock prices of the quoted firms was modeled as the function of short term portfolio investment, subsidiary investment, long term portfolio investment and long term investment. Multiple regressions were formulated. Panel data methodology was employed while the fixed effects model was used as estimation technique at 5% level of significance. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit. Panel unit roots and panel cointegration analysis were conducted on the study, evidence from the findings shows that explained 60.2 percent of the systematic variation in the stock prices of the quoted manufacturing firms, the regression coefficient found total capital ratio have negative relationship stock prices of the quoted manufacturing firms while equity capital, debt equity ratio and debt capital have positive relationship with the stock prices of the quoted manufacturing firms. The probability coefficient found that equity capital and debt capital are statistically significant while total capital ratio and debt equity ratio have no significant relationship with stock prices of the manufacturing firms. From the findings, the study concludes that there is significant relationship between financing policy and stock prices of quoted manufacturing firms, the recommend that manufacturing firms in Nigeria should adopt pecking order in other to finance their investment to improve the stock prices of the manufacturing firms.
