Determinants of Share Price on the Nigerian Stock Exchange

Factors influencing demand and supply interact to determine price. In a competitive stock market, these factors include: level of economic activity, interest, inflation and exchange rates, as well as firm's performance measures such as earnings, dividend and net assets per share, return on equity and assets and gearing ratio among others. These accounting and macroeconomic variables were utilized to empirically assess the determinants of share price (SP) and their relative importance on the Nigerian Stock Exchange (NSE). Dividend Share Valuation Model, where SP is the discounted value of stream of dividends conditional on information, was adopted. Seventy-two dividend-paying firms listed on NSE between 2000 and 2011 were sampled. Generalized least squares and stepwise regression estimation techniques were used to evaluate the panel model at 5% level of statistical significance. The results of both techniques revealed that firm performance and macroeconomic conditions are major determinants of Share Price on NSE