Analysis of the performance of agro-based companies in the Nigerian stock exchange

Idris Akanbi Ayinde, Abiodun Olayinka S. Ayanwale, Musediku A. Shittu and Razak Olufemi Kareem

Journal of Agribusiness in Developing and Emerging Economies, 2013, vol. 3, issue 2, 119-130

Abstract: Purpose - – Given the potential of the stock market to provide required capital for agro-based companies, a time series analysis of the performance of major agricultural-based companies in the Nigerian stock exchange (NSE) was carried out. Design/methodology/approach - – Monthly records of volume of shares traded (VOL) as well as its determinants – current market price (CMP), dividend (DIV), earnings per share (EPS), price-earning ratio (PER), earning yield (EARN) and dividend yield (YIELD) were obtained from the NSE as indicators of performance through 11 years (1998-2008). Non-stationarity of the variables under consideration led to re-conceptualisation of the model as a vector autoregressive (VAR) system. Existence of more than one co-integrating vector in the data through the Johansen test, led to estimation of restricted VAR using the Vector Error Correction Model (VECM) imposing normalisation of VOL and PER. Findings - – The result of the analysis revealed that VOL is positively related to YIELD and CMP while it is inversely related to EARN, EPS and DIV. On the other hand PER increases with increasing EPS and DIV but reduces with increase in EARN and CMP. Short-run adjustment coefficients were generally large ranging from four months to ten years. Research limitations/implications - – However, variables coefficients were more elastic in the long run. Originality/value - – This paper is an original article and has not been done by any other researcher. Furthermore, this paper has not been submitted to any other publishing house prior to this.

Keywords: Performance; Nigeria; Agro-based; Stock exchange (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jadeep:v:3:y:2013:i:2:p:119-130

DOI: 10.1108/JADEE-02-2013-0004

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