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Implications of Accounting Information for Security Pricing in the Nigerian Stock Market

Okoye, Lawrence U. (2012) Implications of Accounting Information for Security Pricing in the Nigerian Stock Market. Certified National Accountant. pp. 26-32.

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Dividend decision involves the conflicting interest of different groups of shareholders whose interests need to be ignored but should be integrated into a firms dividend policy. Depending on their individual disposition, some shareholders are interested in receiving cash dividend while some others are interested in growing their investment for the fUture. Therefore, while one school argues that information on dividend is critical to stock price movement, the other contends that earnings retention is the active force in stock price determination. Review of relevant literature, however; shows that both dividend and earnings retention are necessary decision-making variables, as each exerts a significant influence on stock price. Empirical studies have shown that dividend and earnings reports positively influence the movement of stock price. The quantum of available literature suggests that dividend ranks higher than earnings in the explanation of movements in share price. Distorted accounting information have led to business failures as the market values of stocks associated with them cannot be sustained, thus the reliability of accounting information need not be overemphasized. Information should also be timely and affordable. Variability in stock prices are sometimes not supported by the economic fUndamentals in the respective organizations, implying that variables outside dividend and earning, may also account for stock price movement

Item Type: Article
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HF Commerce > HF5601 Accounting
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: Mrs Patricia Nwokealisi
Date Deposited: 22 Jun 2017 10:25
Last Modified: 29 Jun 2017 15:27

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