Company fundamentals and stock price movements: The role of crude oil prices – Evidence from Nigerian Stock Exchange (NSE)

Main Article Content

Article Sidebar

Published Oct 26, 2020
Tijjani Bashir Musa


This study analyzed company fundamentals on how it relates and predict stock price movements and the extent of the role of oil prices in moderating the influence of these company fundamentals in stock price movements. The study covered the period of 2014 to 2018. The study is a panel study. A total of 132 companies were sampled from 196 companies listed on the Nigerian Stock Exchange (NSE) as of December 2018. Data were collected from a secondary source. Multiple linear regression models were used to analyze the data. The study found that a relationship exists between selected companies' fundamentals and stock prices, and oil prices moderate the relationship. But EPS and Working Capital have high predictive power on stock price movements but moderating with oil prices the influence reduces significantly. The study recommends among others that Managers of companies in Nigeria should formulate policies and exert effort geared towards improving company fundamentals in the event of oil prices increases.

How to Cite

Musa, T. B. (2020). Company fundamentals and stock price movements: The role of crude oil prices – Evidence from Nigerian Stock Exchange (NSE). Journal of Research in Emerging Markets, 3(1), 1–13.
Abstract 199 | PDF Downloads 101

Article Details


Return on Asset (ROA), Return on Equity (ROE), Earning Per Share (EPS), Profit, Working Capital , Company Fundamental



Abdulrasheed, H. & Lokman, G. (2002). On the Causal Relationship between Stock Prices and Exchange Rates: Evidence from the MENA Region. Beykent University and University of Skovde Working paper No. 5, Istanbul, and Skovde.

Arango, L.E., Gonzalez, A. & Posada, C.E (2002). Returns and Interest rate: A nonlinear relationship in the Stock Market. Applied Financial Economics, 12(11), 835-842.

Arouri, M., Lahiani, A. & Nguyen, D., K. (2011). Return and Volatility transmission between World Oil Prices and Stock Markets of the GCC Countries. Economic Modelling 28(4), 1815-1825.

A Zman-Saini, W.N., Habibullah, M.S., Lawsiong, H. & Dayang- Afizzah, A.M (2006). Stock prices, exchange rates, and causality in Malaysia.

Bahmani-Oskooee, M. & Sohrabian, A. (1992). Stock Prices and the Effective Exchange rate the dollar. Journal of Applied Economics (24), 459-464.

Ball, R. & Brown, P. (1998). The Importance of Accounting Information in Portfolio Optimization. Journal of Accounting Research. (2) 128-150.

Ball, R. & Brown, P. (2001). An empirical of accounting income numbers. Journal of Accounting Research. (6)159-178.

Bashir, T.M. (2015). Firm Performance and Stock Prices in Nigeria: A study of some selected Quoted Firms in the Nigerian Stock Exchange. Article published in the Ilorin Journal of Management Review. (2), 61-72.

Bashir, T.M. & Mustapha, N. (2016). Firm Price -Earnings Ratio and Stock Prices: A Study of Quoted Firms in the Nigerian Stock Exchange. Article published in Sahel Analyst Journal of Management Sciences. (14),142-152.

Bulkley, E.J. & Tonke, S. (2001). A Comparative Analysis of Stock Price Behavior and Investors Earning on Bombay, London, and New York Exchanges. Journal of Financial and Quantitative Analysis. 319 – 413.

Clark, K. (2013). What is the difference between the return on equity and return on capital?

Cleveland, D. (2012). The S&P 500 Not overvalued, still undervalued Given ROA Strength of USA Corporates. Financial Review (3)5. Pp. 28-51.

Chang, C.Y. & Wang, Y.M. (2008). A Study on the Technical Efficiency of Taiwan Commercial Banks. Asian- Pacific Economic and Management Review, 2(2). 23-48.

Chetty, R. Rosenberg, R. & Saez, E. (2007). The Effects of Taxes on Market Responses to Dividend Announcements and Payments: what can we learn from the 2003 dividend tax cut Retrieved? International Monetary Fund (IMF) working paper (7), 204. European Department.

Dehuan, J. & Zhenhu, J. (2008). Firm performance and Stock Returns An empirical study of the top-performing stock listed on the Shanghai Stock Exchange. Academy of Accounting and Financial Studies Journal 12 (1), 53-6.

Fama, E. (1970). Efficient Capital Markets: A review of theory and empirical work. The Journal of Finance Association, Wiley Online Library. 25 (2), 383-417.

Fama & French (2002). Estimate the Equity Premium using Dividend Growth rates: Measure of the Expected Rate of Capital Gain. Journal of Applied Corporate Finance, Morgan Stanley.14 (1).67-79.

Filbeck, G.T., Krueger, M. & Preece, D. (2007). CFO Magazine Working Capital Survey: Do selected firms Work for shareholders? Quarterly, Journal of Business Economics. 46 (2), 5-22.

Fisher, E.D. & Jordan, R.J. (2003). Security Analysis and Portfolio Management.

Forte, A. (2000). Stock returns, real activity, inflation, and Money. American Economic Review, (71), 545-564.

Gompers, P.A.,Ishii, J. L. & Metrick, A. (2003). Corporate Governance and Stock Price. Quarterly Journal of economics, Financial Institute Centre. 45(9), 234-255

Granger, C. W., Huang, B. & Yang, C.W. (2000). A Bivariate Causality between Stock Prices and Exchange Rates: Evidence from the recent Asian flu” (unpublished).

Hansen, R. S. & Crutchley, C. (2006). Corporate Earnings and Financing: An Empirical Analysis. Journal of Business (63), 347- 371.

Harasty, H. & Roulet, J. (2000). Modeling Stock Market Returns. Journal of Portfolio Management, 26(2), 33.

Hennigar, E.S. & Soenen, L.A. (2008). An Analysis of Exchange Rates and Stock Prices: the U.S. Experience between 1980 and 1986. Akron Business and Economic Review, (19), 1988, 7-16.

Higgin R. C. (2010). Analysis of Financial Management. McGraw Hill Publishers. 10th Edition

Hsing, Y. (2004). Impacts of Fiscal Policy, Monetary Policy, and Exchange Rate Policy on Real GDP in Brazil: A VAR Model. Brazilian Electronic Journal of Economics, 6(1), 98 -121.

Kao, C. & Chiang, M.-H. (2000). On the Estimation and Inference of a Cointegrated

Regression in Panel Data, in Baltagi B. H. (ed.), Advances in Econometrics: Non-stationary Panels, Panel Cointegration, and Dynamic Panels. (15), 179–222.

Keats, B.W., & Hitt, M.A (2000). A Causal Model Linkages among Environmental Dimensions, Macro Organizational characteristic, and Performance. Academy of management journal, (3), 570-578.

Kpocke, R. W. (2000). Profits and Stock Prices: Importance of Being Earnest. New England Economic Review. (23) 124- 153.

Lam, O. (2003). Earnings and expected returns. Journal of finance. (5), 1563-1587.

Lev., B. (2001). On the usefulness of earnings and earnings research: lessons and directions from two decades of empirical research. Journal of Accounting Research. 153-192.

Ling, M., John, W. & Zhang, X., (2006). Specification Tests of International Asset Pricing Models. Journal of International Money and Finance (25), 275-307.

Loughran & Ritter (2003). The new puzzle of stock price movements. Journal of Finance (50) 23-51.

Milosevic, S.A & Milenko, I. (2017), Impact of Company performances on the Stock Price: Empirical analysis on selected companies in Serbia. Article published in advance in Economics, Business and Management Research, (40) 17-28.

Ohlson, F. (1995). The distinction between Earning and Dividend. Federal Reserve Bank Kansas City, Working paper.

Oliver, I. I (2015), Effect of Banks Financial Performance on Share Prices: Evidence from Nigerian Banking Industry (2004 – 2013). European Journal of Research and Reflection in Management Sciences. (3) 3, 69-79.

Pedroni, P. (2000), Panel Cointegration; Asymptotic and Finite Sample Properties of Pooled Time Series Tests, With an Application to the PPP Hypothesis. Working paper, Department of Economics, No. 95–013, Indiana University.

Pedroni, P. (2001). Critical values for cointegration tests in heterogeneous panels with multiple regressors, Oxford Bulletin of Economics and Statistics. (61), 653–670.

Puspitaningtyas, Z. (2017), Is Financial performance Reflected in Stock Price”. Article published in advance in Economics, Business and Management Research, (40) 17-28.

Remi, S.A. (2005). Stock price and Earning per share: A sectoral analysis with panel data. Journal of Business and Economic Review, (3), 89-98.

Rentschler, J.E. (2013). Oil Price Volatility, Economic Growth, and the hedging role of Renewable Energy. Policy Research Working Paper Series 6603, The World Bank.

Richardson, E. (2000). The organization of industry.

Salami, H. (1999). Terms and their Conceptual meaning.

SEC committee reports of 2006.

SEC committee reports of 2007.

Shaharudin, R.S, Samad, F., Bhat, S. (2009). Performance and Volatility of Oil and Gas Stocks: A comparative study on selected Oil and Gas Companies. International Business Research 2(4) 87-99.

Sharma, S. (2009). Determinants of Equity Share Prices in India. World Research Journal of Art, Science, and Commerce. 11(4). 51- 60.

Shiller, R.J. (2000). Market Volatility.

Spyrou, I. S. (2001). Stock returns and inflation: evidence from an emerging market. Applied Economics Letters, 8.

Stavarek, D. (2004). Stock Prices and Exchange Rates in the EU and the USA: evidence their mutual interactions Silesian University School of Business Administration

Sivakumar, K. & Waymire, G. (2000). The information content of earnings in a discretionary reporting environment: evidence from NYSE industrials, 1905-10. Journal of Accounting Research. 31 (1), 62-91.

Solnik, B. (2000). Using Financial prices to Test Exchange Rate Models: A note. A Journal of Finance, (42), 141-149.

Su, C., Chang, Y., Chen, Y. & Ling, C. (2008). The relationship between Stock prices and EPS: Evidence-Based on Taiwan panel data. Economic Bulletin. (3) ,1-12.

Uddin, M.G.S. & Alam, M.M. (2007). The Impacts of Interest Rate on Stock Market: Empirical Evidence from Dhaka Stock Exchange. South Asian Journal of Management and Sciences, 1(2), 123-132.

Van Horne, J.C & Wachowicz, J.M (2009). Fundamentals of financial management.

Yamane, T. (1967). Sampling Formula E-Book.

Yu, L. (2003). Capital Market Seasonality: The case of Stock Returns. Journal of Financial Economics. 3, 370-402.

Zanjidar, M. & Sadri, P. (2012). The relationship between earnings per share forecast error and abnormal stock return of newly accepted corporation: Evidence from Iran's Capital Market. African Journal of Business Management. 6 (10), 3673-3681.

Zordan, D.J (2005). Stock prices, Interest Rates Investment Survival.