On the Relationship Between Income Statement Components and Stock Returns: Nigeria Stock Exchange

Abdulraouv Olawale ALABI

Abstract

This paper carried out empirical investigation of the relationship that exists between income statement components and stock returns, using Nigeria stock exchange market stock returns as a case study. The paper makes use of the result of financial daily stock activities of Nigeria stock exchange between the periods of January 1st 2014 to January 31st 2014. In this study, twenty two (21) companies were randomly selected on the basis of data obtained from Nigeria stock exchange. By using Pearson Correlation Coefficient analysis, the result shows that there exist a strong relationship between component of income statement and the stock returns. Thus, the finding established main objective behind the adoption of new accounting policy (IFRS). The study therefore recommends that adequate and enough attention should be given to all the components of accounting variables while preparing statement of account.

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