Evaluation of the Effect of Financial Factors on Shareholders’ Value of Listed Pharmaceutical Firms in Nigeria
The study ascertained the effect of Financial Factors on Shareholders’ Value of listed ePharmaceutical Firms on Nigeria Stock Exchange. The study ascertained the effect of Sales Revenue (SR), Investment in Working Capital (IWC) and Operating Profit Margin (OPM) on Earnings Per Share (EPS) in the pharmaceutical firms in Nigeria. Data for the study were sourced from Annual report of the sampled pharmaceutical firms. The data collected were analyzed using Eview. The results of the study show that Sales Revenue (SR) has a positive and significant effect on Earnings Per Share (EPS) of Nigeria pharmaceutical firms; investment in working capital (IWC) has a negative and insignificant effect on Earnings Per Share (EPS) of Nigeria pharmaceutical firms and Operating Profit Margin (OPM) has a positive and significant effect on Earnings Per Share (EPS) of Nigeria pharmaceutical firms. Based on the findings, the study recommends among others that Pharmaceutical firms in Nigeria should employ more of sales strategies in other to generate more sales for the firms to enhance returns to the owners of the business, the shareholders.
Ubesie Madubuko Cyril,
Onuh Jonathan Echobu,
Mbah Chris Chukwuemeka,
Evaluation of the Effect of Financial Factors on Shareholders’ Value of Listed Pharmaceutical Firms in Nigeria, International Journal of Finance and Banking Research.
Vol. 5, No. 5,
2019, pp. 114-125.
Bartlett, C. A. and Ghoshel, S. (2014). An Empirical Study of Impact of EVA Momentum on the Shareholders Value Creation as Compared to Traditional Financial Performance Measures with Special Reference to the UAE. International Journal of Economics and Finance, 8 (5), 23-34.
Pareek (2003) Understanding Organisation Behavior. New Delhi: Oxford.
Frank, I. (2006), Accountants in business for value creation worldwide (2). Financial Standard, 10 July P. 64
Kappaport, A. (2009). Linking Competitive Strategy and Shareholder Value, Journal of Business Strategy, 2 (6), 58-67.
ICAN Study Text (2014). Corporate Reporting, Emile Woolf International, Bracknell Enterprise and Innovation Hub Ocean House, United Kingdom.
Srivastava, R. K., Shervani, T. A. and Fahey, L. (2008). “Marketing, Business Processes and Shareholder’s Value: An Organizationally Embedded View of Marketing Activities and the Discipline of Marketing.” Journal of Marketing, 6 (2), 168-179.
Stewart, G. B. (1991). The Quest for Value: A Guide for Senior Managers, Harper Business, New York.
Franco Modigliani and Merton H. Miller (1958). The cost of capital, corporation finance and the theory of investment. The American Review. Vol. 48, No. 3 (Jun., 1958), pp. 261-297
Chmelikova, M. T. (2008). Cost and Management Accounting: An Introduction. London, William Publishers.
Arshan, S. B. (2015). Effect of Inventory Management Practices on Organizational Performance. International Journal of Business, Humanities and Technology, 3 (5), 157-180.
Brook, P. I. (2012). Inventory Management Theories. Journal of Ecclesiastical History, 49 (4), 53-73.
Dimitrios, K. P. (2008). The Effect of Inventory Management of Firms Performance. International Journal of Productivity and Performance Management. 5 (50), 355-369.
Fabrizi, O. and Ididu, J. O. (2014). Inventory Management System and Performance of Food and Beverage Companies in Nigeria. IOSR Journal of Mathematics, 6 (1), 336-341.
Pandey, C. (2005). The Role of Inventory Management on Performance of Industries in Kenya. European Journal of Business and Social Sciences, 4 (4), 64-80.
Fermandez, P. (2001). “A Definition of Share Value Creation” Working Paper Series, IESE Business School.
Pandey, I. M. (2010). “What Drives Shareholder Value” Working Paper WP, Indian Institute of Management, Ahmedabab, India.
Colasse, B. (2010). Investment Valuation: Tools and Techniques for Determining the Value of any Asset. 2nd Edition. John Wiley and Son, New York.
Bucataru, N., Cosman, S., Holban, D. (2006). Milk Production Business (In Romanian) National Agency for Rural Development Ch.: SE. F. E.-P. Central Printing House, 2006, 136 p.
Shil, N. C. (2009). Performance Measures: An Application of Economic Value Added. International Journal of Business and Management, 4 (3), 169-177.
Nowak, O. K. (2017). Price and Return Model. Journal of Accounting and Economic. 5 (20), 155-192.
Bdl. R, Brown, P. and Hamad, T. V. (2014). An Empirical Evaluation of Accounting Income Unmbers. Journal of Accounting Research, 6 (2), 157-178.
Farokhadi, C. N. and Niresh, S. U. (2015). Investment Performance of Common Stock in Relation to their Price-Earnings Ratio: A Test of the Efficient Market Hypothesis. The Journal of Finance. 2 (32), 1-3.
Alloy, S. U. and Alfred, M. O. (2014). The Relationship between Earnings and Stock Return; Empirical Evidence from the Greek Capital Market. International Journal of Economics and Finance. 1 (1), 24-29.
Freeman, R & C. Wicks, Andrew & Parmar, Bidhan. (2004). Stakeholder Theory and The Corporate Objective Revisited. Organization Science. 15. 364-369. 10.1287/orsc.1040.0066.
Freeman, R. E., Harrison, J. S., Wicks, A. C, Parmar, B., & de Colle, S. (2010). Stakeholder Theory: The State of the Art. Cambridge: Cambridge University Press.
Del Giudice, Manlio & Peruta, Maria & Maggioni, Vincenzo. (2013). Collective Knowledge and Organizational Routines within Academic Communities of Practice: An Empirical Research on Science-Entrepreneurs. Journal of the Knowledge Economy. 4. 10.1007/s13132-013-0158-3.
Miletkov, M., Moskalev, S. and Wintoki, M. (2015), "Corporate boards and acquirer returns: international evidence", Managerial Finance, Vol. 41 No. 3, pp. 244-266.
Conyon, M. J. and He, L. (2004) Compensation Committees and CEO Compensation Incentives in US Entrepreneurial Firms. Journal of Management Accounting Research, 16, 35-56.
Hab LH, Johan S, Schweizer D (2016) Is corporate governance in China related to performance persistence? Journal of Business Ethics. 134: 575-592.
Arenas, D. & Rodrigo, P. J (2016). On Firms and the Next Generations: Difficulties and Possibilities for Business Ethics Inquiry Bus Ethics (2016) 133: 165.
Perrault, E., & McHugh, P. (2015). Toward a life cycle theory of board evolution: Considering firm legitimacy. Journal of Management & Organization, 21 (5), 627-649. doi: 10.1017/jmo.2014.92.
Ayuso, Silvia & Roca, Mercè & Arevalo, Jorge & Aravind, Deepa. (2016). What Determines Principle-Based Standards Implementation? Reporting on Global Compact Adoption in Spanish Firms. Journal of Business Ethics. 133. 1-13. 10.1007/s10551-014-2412-4.
Shen, W. & Gentry, R. J. (2014), A cyclical view of the relationship between corporate governance and strategic management: Journal of Management and Governance. 18, 4, p. 959-973 15 p.
Kaler, J. (2006). "Evaluating Stakeholder Theory," Journal of Business Ethics, 69 (2), 249-268.
Molyneux, P. and Fiordelisi, F. (2010). The Determinant of Shareholder’s Value in European Banking. Journal of Banking and Finance, 6 (1), 16-22.
Makkar, U., Gupta, M., & Kumar, S. (2004). Marketing Support System for Small Scale Industries: will it be Able to Withstand the Impact of Globalisation? (with Special Reference to Nsic). Indian Journal Of Marketing, 34 (2).
Umar, M. S. and Musa, T. B. (2013). Stock Prices and Firm Earning Per Share in Nigeria; JORIND2 (11), 16-19.
Belog, F. (2008). Shareholder Agreement and Firm Value; Evidence from French Listed Firm.
Hemadivya, K. and Devi, V. R. (2013). A Study on Relationship between Market Price and Earning Per Share with Reference to selected Companies. International Journal of Marketing, Financial Services and Management Research, 2 (9), 48-52.
Mlonzi, V. F., Kruger, J. and Nthoesane. M. G. (2011). Share Price Reaction to Earnings Announcement on the JSE-ALtx; A Test for Market Efficiency. Southern African Business Review, 3 (15).
Ebrahim, M. and Chadegani, A. A. (2011). The Relationship between Earnings, Dividend, Stock Price and Stock Return. Evidence from Iranian Companies. International Conference on Humanities, Society and Culture, 20 (12), 84-91.
Inyiama, O. I. and Ozouli, C. (2014). Interactions between Earnings and Share Prices in Nigeria Brewery Industry. Research Journal of Finance and Accounting, 5 (22), 2222-2847.
Chang, D., Chen, O., Su, I. and Chang, U. (2008). The Relationship between Stock Price and Earning Per Share; Evidence Based on Taiwan Panel Data. Economic Bulletin, 3 (3), 1-12.
Oladele, K. O. (2013). The Determinants of Value Creation in the Nigerian Banking Industry; Panel Evidence. International Journal of Business and Social Science, 3 (2), 90-101.
Geroski, P. A., Machin, S. J. and Walter, C. F. (2014). Corporate Growth and Profitability. The Journal of Industrial Economic, 2 (4), 171-189.
Bhunia, A. (2012). The Relationship between Shareholders’ Value and Financial Variable, a Study of Maximize Shareholder Value. Journal of Marketing and Business Research, 1 (1), 6-16.
Mohammed, A. and Usman, S. (2016), “Corporate attributes and share value of listed pharmaceutical firms in Nigeria”, Journal of Arts, Science and Commerce, Vol. 7 No. 1, pp. 88-98.
Almumani, M. A. (2014). Determinant of Equity Share Prices of the Listed Banks in Amman Stock Exchange; Quantitative Approach. International Journal of Business and Social Science, 5 (1), 91-94.
AL-Shubiri, F. (2010). Analysis of the Determinants of Market Stock Price Movements: An Empirical Study of Jordanian Commercial Banks. International Journal of Business and Management, 5 (10), 137-147.
Arowoshegbe, A. O. and Ididu, J. O. (2013). Shareholders Value and Profitability of Quoted Companies in Nigeria. International Journal of Business and Social Research, 3 (3), 99-106.
Atiyet, B. A. (2012). The Impact of Financing Decision on the Shareholder value Creation. Journal of Business Studies Quarterly, 1, 44-63.
Boodhoo, S. R. (2009). Capital Structure and Ownership Structure: Review of Literature, The Journal of On Line Education. Journal Edition, 4 (2), 1-8.
Chitra, G. G. and Venkateshwarlu, M. (2017). Shareholders’ Value Creation. International Journal of Accounting and Finance, 4 (3), 20-32.
Copeland, T. T., Koller and Murrin, J. (2000). Is Economic Value Added more Associated with Stock Return than Accounting Earnings? The UK Evidence. International Journal of Managerial Finance, 2 (4), 343-352.
Erasmus, P. D. (2008). The Relative and Incremental Information Content of the Value Based Financial Performance Measure Cash Value Added. Management Dynamics, 17 (1), 2-15.
Grant, J. (2003). Foundation of Economic Value Added. John Wiley and Son Inc., New Jersey.
Hasani, S. M. and Fathi, Z. (2012). Relationship of the Economic Value Added with Stock Market Value and Profitability Ratios. Interdisciplinary Journal of Contemporary Research in Business, 4 (3), 406-415.
ICAN Study Text (2014). Strategic Financial Management. Emile Wolf International, Bracknell Enterprise and Innovation Hub Ocean House, United Kingdom.
Inyiama, O. (2014). Interactions between Retained Earnings and Provision for Depreciation in Nigeria Brewery Industry, International Journal of Finance and Accounting, 3 (5), 316-326.
Morck, R. A. and Shleifer, W. C. (2003). Determinant of Earning Per Shares, Stock Price, Price-Earnings Ratio in Equity Valuation. An Empirical Analysis. Journal of Financial Economics. 20 (6), 293-316.
Onaolapo, A. A. and Kojala, S. O. (2010). Capital Structure and Firms Performance; Evidence from Nigeria. European Journal of Economic, Finance and Administrative Science, 25 (5), 70-82.
Onofrei, M. (2007). Supply Chain Strategy: Its Impact on Shareholders’ Value. The International Journal of Logistics Management, 1 (3), 1-10.
Opler, T. C., Saron, M. and Titman, S. (2005). Designing Capital Structure to create Shareholder Value. Journal of Applied Corporate Finance, 10 (1), 21-32.
Sharma, J. A. (2011). Earnings, Book Values and Dividends in Equity Valuation. Contemporary Accounting Review Research, 11 (4), 661-687.
Smith, E. C. (2003). Investment Valuation: Tool and Technique of Determining the Value of any Asset. International Journal of Accounting and Finance. 4 (4), 30-41.
Suleman, A. S. (2013). Capital Structure Effect on Firms Performance. Evidence from Saudi Listed Companies. Retrieved from http://library2.
Sulger, R. M. (2008). Performance Measures: Traditional Accounting Measures Versus Economic Value Based Measure. 3rd International Conference on Accounting and Finance in Transition, London University, University of Greenwich, Business School.
Tarbara, U. E. and Dicu, F. O. (2007). Toward Improved Use of Value Creation Measures in Financial Decision Making; Journal of Applied Business Research, 26 (4), 1175-1188.