Financial performance indicators and market value of listed firms
Main Article Content
Abstract
This study examined how financial performance indicators affect the market value of listed manufacturing firms in Nigeria, using an ex-post facto research design. Panel data regression was applied to secondary data from 40 purposively and randomly selected firms listed on the Nigerian Exchange (2015–2024). The dependent variable, market value, was modeled against five explanatory variables: Tobin’s Q, Return on Assets, Return on Equity, Earnings Per Share, and Firm Size. The model achieved an R-squared value of 0.3734, indicating that 37.34% of the variation in market value was explained by the predictors. The overall model was statistically significant, with a Wald chi-square of 88.19 (p < 0.01), confirming the joint explanatory power of the regressors. EPS emerged as the most significant determinant (β = 0.6055, p < 0.01), supporting the signaling theory that earnings positively influence investor perception. Tobin’s Q also showed a significant positive relationship with market value (β = 0.6322, p = 0.016), underscoring the role of growth opportunities in market valuation. Firm Size was positively significant (β = 3.9726, p = 0.008), suggesting that larger firms tend to attract higher market valuation. Return on Assets had a negative but marginally significant effect (β = –0.0301, p = 0.081), while Return on Equity was statistically insignificant (β = 0.0052, p = 0.657). The study recommended improved earnings management, strategic scaling of firm size, and reevaluation of traditional performance metrics in valuation models to better align with investor expectations and enhance market-based value.
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References
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