ABSTRACT
Optimal
investment decision maximizes the value of shareholders’ wealth, while
achieving the goals of the corporation. However, making investment decisions
takes into consideration internal and external factors and capital budgeting
moderators: inflation, political instability, economic conditions and
management attitude to risk. Based on economic theory, good capital budgeting should have a significant
positive link with shareholders’wealth, especially when the moderators are
positively aligned in their decisions.However, the presence of failed or
abandoned projects,in practice, indicates that this is not the case always. In
view of this, it becomes imperative to seek new insight on how moderators of
capital budgeting impact shareholders’ wealth in the banking sector in Nigeria.
The
study adopted the descriptive survey research design. The study population consisted of 53,528 members of staff of twelve
commercial banks in Nigeria. Primary and secondary data were used in the
study. Taro Yamane’s formula was used
to determine the sample size of 397. Members of the sample were selected using
simple random sampling technique. A self-developed questionnaire was
used to collect primary data from top, middle and lower management staffof the
selected banks. The questionnaire was validated, with a Cronbach’s alpha test
yielding between 0.76 and 0.91 for the constructs of the variables. The
response rate was 90.7 %. Secondary data were collected from the published financial statements of twelve purposively selected
banks from 2004 to 2013. Descriptive statistics were used to analyze the
secondary data, while multiple regressions analysis was used to analyze the primary
data.
The
findings revealed that capital budgeting moderatorshad significant effect
ondividend per share (R2= 0.286, p<0.05).Profitability was
significantly affected by capital budgetingmoderators (R2 = 0.448,
P<0.05), and there was a significant effect on retained earnings by capital
budgeting moderators (R2 = 0.403, P<0.05).Similarly, capital
budgeting moderators had a significant effect onmarket value (R2 =
0.404, P<0.05).
In
conclusion, capital budgeting moderators influenced shareholder’s wealth
positively. It was therefore recommended that investment managers should factor
in the influence of capital budgeting moderators on shareholders wealth when
making investment decisions. This implies that bank managers should always take
such factors as inflation, political instability, management attitude to risk
and general economic conditions into account when taking investment decisions.
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The focus on shareholder’s wealth has gained
much importance in recent times within the Nigerian financial sector. The
reason for this can be traced to the Central Bank of Nigeria reforms, monetary
policies and bank recapitalization effects. Other reason for the increase
attention to shareholder’s wealth with respect to commercial banks is the
intermediary role of bank (Chen, 2006) in the financial sector of the economy
and the volume of investors it attracts yearly. In recent times, there have
been financial crisis in the world financial sector, especially, in the
Nigerian commercial banks. According to Aanu, Odianonsen &
Foyeke (2014) some of the problems
emanated from unethical and wrong capital budgeting procedures of bank
executives. These unethical procedures stem from absence of application of
cutting-edge and transparent capital budgeting, inappropriate use of financial
options for financing capital projects, and importantly, inability to manage
huge capital base (Sanda, Garba & Mikailu, 2011; Al-Matari, Al-Swidi, Fadzil, Fadzil & Al-Matari 2012).
It is pertinent to recall that before the recapitalization exercise of
2004; the banking industry was highly undercapitalized. It was encumbered by
fragile controls, poor regulatory design, feeble management practices and
rampant ill-corporate governance practices. To a large extent, fund performance
was just a minute ratio of the banks liabilities (Uchendu, 2005). It was
against such background the Central Bank of Nigeria, years’ back, set out the
initial stage of reforming the sector to its now diffused and robust state. In
the reform process or recapitalization exercise, some commercial banks raised
their capital base to N25Billion (twenty-five billion naira) and beyond through
funds from the capital market. Banks that fail to raise this stipulated minimum
capital requirement of twenty-five billion naira either merged with other banks
in similar conditions or were acquired by stronger banks. This development was
a watershed in the history of the Nigerian banking industry, especially in the
area of increase funds or shareholder’s wealth in the hands of members of board
of directors of these banks (Sani, 2009).
However, the major challenge after the
recapitalization was the need to put the funds into good use so as to yield
positive returns to the shareholders. Due to the conflict of interest that
arises between managers and shareholders because of the increase in gap created
between ownership and control of the banks, some of these managers started
pursuing their own goal instead of that of the shareholders (Berlet & Means, 1932;
Jung, 2015), by embarking on
projects without proper appraisal (some of the projects either failed or were
abandoned), granting loans to themselves and their allies/related parties
without properly mitigating the risk involved; and within a very short time,
some of the banks were making losses. As a result, they could not pay dividend,
this affected the retain earnings and other shareholders funds, and the market
value of the bank shares crashed (Kuye, Ogundele &
Otike-Obaro, 2013).
According to
Tufuor and Doku (2013), a major
thrust of investment managers is the optimization of shareholders wealth in
whatever direction they decide to follow. The pursuance of this aim is embedded
in some critical decision amongst which is investing decision. Consequently one
of the major tools of carrying out this process is through capital budgeting.
Capital budgeting is the planning process used to evaluate an organization’s
expenditure on assets whose revenue stream is supposed to extend beyond a
period of one financial year (Van-Horne &
Wachowicz, 2005).
According to Froot and Stein (1998), if capital budgeting is appropriately
done, it will bring about a huge achievement for any organization. This is due
to the well understood potency of capital budgeting decisions in enhancing
corporate performance by accelerating revenue stream and increasing the value
of stock prices. In addition, capital budgeting can also affect bank financial
performance positively if sound investment decisions are made. On the other
hand, if poor financial decisions are made, it may amount to financial danger
and total bankruptcy. While capital budgeting is the planning process, capital
budgeting moderators is the
subjective appraisal of a particular project’s taking cognizance of payback, net present value (NPV) of the organization and
its internal rate of return (IRR) (David, 2016).
Poor investment decisions in a financial year or period of time will
affects a bank’s profitability, retained earnings, dividend payment and may
lead to shareholder’s distrust, prompting shareholders to insist on sharing
retained earnings and other common wealth. Poor decisions according to Professional Management Education (2010), could be due to lack of subjective
appraisal of other capital budgeting factors that encompass management decisions, need of the project,
accounting methods, government policy, taxation policy, earnings,
lending terms of financial institutionsandeconomic situation on which the project is carried out. Retained earnings as a performance indicator
are employed as an in-house and economical path to ensure constant financing of
favourable financial openings (Mehar, 2005). Also, financial profitable bank
with strong net income could afford more dividend than less financial
successful bank (Ahmed & Javid, 2008); thus for the weak bank with poor
investment decision, its dividend per share will not be as substantial as that
of stronger banks.
The more dividends a bank pays the less
capital it will have for investment purposes and the fewer dividends it pays,
the more capital it has for investment purposes. When the dividend is high, it may dampen
future business growth because the bank will have less capital to fund new or
existing opportunities (assuming it doesn’t raise capital by issuing additional
equity). In addition, the bank management may decide to reinvest the surplus
into business projects; use it to repurchase their own stock or pay it out to
shareholders. Thus a chain reaction may develop when shareholders are more
inclined in developing country like Nigeria to share the retained earnings
(Roomi, Chaudhry & Azeem, 2011). They may discern that the amassing of
retained earnings is at the same amount as dividends, and thus majority of this
income are used by the relevant operators to further advance the established
rules of the organization.
Making a good investment decision, according
to Vineeta (2002), is of foremost weight due to the paucity of funds in firms
and also due to the projected gains that may accrue to the firms. The gain from
sound investment decisions is easily noticeable in firms not only to boost firm
performance and maximize shareholder’s wealth but also ensures an increase in
dividend per share and market value. More so, organizational profitability is,
most times, determined by the capital expenditure embarked upon by the
management of the organization. Vineeta (2002)
wrote that funds sunk into capital expenditure needs to be recouped with
profit or else the organization will make loss from the expenditure. Therefore,
the procedure of capital budgeting ensures that resources are always apportioned
diligently and managers are enabled to channel effort in the direction of
positive returns that will recoup expenditure and give a fair return back to
the owners of capital that was expended.
According to Omoleyinwa (2000), management can
only maximize shareholder’s wealth or serve the best interest of shareholders
when they employ the techniques of capital budgeting and critically appraise
factors that affect capital budgeting (David, 1997). In addition, management
need to maximize shareholder’s wealth by taking some specific actions such as
directing shareholders’ funds into good use (investment in profitable capital
projects) so that initial outlay will be recouped back as well as profit. It is
pertinent that bank management adopt sound capital budgeting procedures and
good investment decisions if their aim is to maximize shareholder’s wealth.
Sound capital budgeting and good investment decisions entails factoring in
external economies and other economic factors which can negatively impacts investment;
such as inflation, Political stability, Management attitude to risk and
Economic condition (David, 2016). These factors are referred to as capital
budgeting Moderators. For instance, if unpredictable inflation is not factored
into investment decision, it can affect the evaluation of the actual value of
the forecasted prospective cash flow used in investment appraisal. That sum of
money advanced at a rate of interest recovered at a pace equivalent to the
reported or theoretical rate of interest will not be the same (Bora, 2013).
Political stability and Economic condition are
some of the major factors that influence decision on where to invest and the
nature of investment to involve in. In an economy where political instability
is prominent, viable investment opportunity will be minimal. As such,
substantial literature exists, giving weight to the adverse effects of
political instability on an expanse macroeconomic variables including, but not
limited to, GDP growth, personal investment, and soaring costs (Aisen
& Veiga 2013). In
Nigeria, for instance, political office holders are changed almost on regular
basis, and in some cases, political instability may even lead to chaos
resulting in vandalizing business premises.
Furthermore, Bakare (2013), in his work
“Investment Climate and the Performances of industrial sector in Nigeria”
highlighted further that political situation and economic conditions are some
of the factors that affect company profitability and dividend payment. For
example, Nigeria is presently designated as a high risk country for huge and
stable investment owning to worsening state governance, volatile macroeconomic
policies, graft and less than necessary infrastructures among others. The
economic condition may be in form of monetary
policy decision that affects income rate, which also affects the amount of
borrowing, leading to greater effect on investment ventures and the purchase of
consumer items. Consequently, due to bad investment climate and political situations innumerable investors
have in the past couple of months relocated their businesses away from Nigeria
(Nzotta,
& Okereke, 2009).
Thus this study focused on whether or not
capital budgeting moderators such as inflation, political instability,
management attitude to risk and economic conditions as per David (2016) affects
shareholder’s wealth maximization such as dividend payment, profitability,
retained earnings and market value.
1.2 Statement of the
Problem
According to Jones and Felps (2013), financial
economic theory and Shareholders’ Wealth Maximization (SWM) principle are to
achieve immediate operating goal, while ultimate purpose is to maximize market
value in an organization. In other words, Brealey, Myers, Allen
and Mohanty (2012) opined
that the best decision is the one that maximizes the wealth of an
organization’s shareholders. Thus the best investment decision freely speaking
should be the one that generate greater present value of shareholders’ wealth
(Copeland & Weston, 1992). Also, the agency theory suggests that the
relationship between capital budgeting, it’s moderators and organizational
performance or wealth of shareholders is expected to be significant in normal
climes. Notwithstanding the assumption of the theory, so many outcomes and
empirical results on capital budgeting are at variance to one another,
revealing that the relationship is far more complex than earlier thought of.
This can be evidenced by the presence of failed or abandoned projects in the
banks which further indicates that this is not the case always (Kuye,
et. al, 2013).
The argument between paying dividend as a
performance indicator and retained earnings only as adding value to firms’
value was attack by Black and Scholes (1976). According to the authors, “if
dividend is irrelevant, why would a privately driven corporations pay dividend?
Also, why would investors seek out corporations that are capable of paying
dividend yearly”? This fact was confirmed by findings from Osuala (2005), who
found that profitability and other shareholder’s parameters affects dividend
payments.
Furthermore, some events, during the banking
reform exercise, suggested that commercial banks management hardly consider
maximizing shareholder’s wealth. In a bid to be seen as being competitive,
banks such as the defunct Oceanic Bank Plc acquired International Trust Bank
Ltd (ITB) when it is evident that it was not in the best of position to do so
at the time the acquisition took place (Kale, Oni & Njugo, 2008). Not too
long after the deal, Oceanic Bank Plc itself was acquired by Ecobank
Transnational Incorporated (ETI) due to distress emanating from compounded
liquidity problem. Funds were wasted by Oceanic Bank Plc in this transaction;
but this could have been avoided if the decision had been subjected to a proper
capital budgeting analysis (Kuye, et. al, 2013). One reason for this outcome from the
investment angle is that the implementation of capital budgeting was a means of
coping with acute resource scarcity (Pike, 1986). Other explanation for the investment failure
is that the application of capital budgeting techniques, according to stress
hypothesis principle, is in most cases connected with dwindling financial
performance (Haka, Lawrence & George 1985); also it is understood that, in
practice, wealth may not be created because of internal and external
environment factors. Despite the reason proffered for the poor performances of
some of these banks, there is still a need to empirically substantiate the sort
of relationships that exists between the moderators of capital budgeting and
shareholders’ wealth in the commercial banks.
Other contradictory findings between theory
and practice in capital budgeting and shareholder’s wealth is that the link
between future forecast and its effect on wealth creation for shareholders is
more blurred than proposed in literature. It was discovered that higher
earnings per share of common stock (i.e., equity) will tend, ceteris paribus,
to increase as the invested asset remains viable (Verma, Gupta, & Batra,
2009). But the projected future earning
will entail an inclusion of future forecast, this means taking in inflation,
political instability and prevailing economic conditions and any other
variable. This might create a situation where there is more than one possible
outcome. So the decision to be taken by investment expert is compensation
between accepting present gain over uncertain future risk. Since most past
study is special in some areas and succeeding or newer studies tells something
new or different, it becomes imperative to seek new insight on how moderators
of capital budgeting will impact shareholders’ wealth especially in countries
like Nigeria where there is a growing need to fill up the scarcity of
literature as it pertains to the fundamental issues of capital budgeting
moderators and shareholders wealth.
1.3 Objective of the Study
The main objective of this study is to
evaluate the effect of capital budgeting moderators on shareholders’ wealth
maximization in the Nigerian commercial Banks. The specific objectives are to:
- establish
the effect of capital budgeting moderators on dividend payment within the
Nigerian commercial banks;
- assess
the effect of capital budgeting moderators on the profitability of
Commercial banks in Nigeria;
- examine
the effect of capital budgeting moderators on the retained earnings of
commercial banks in Nigeria and
- ascertain
the effect of capital budgeting moderators on the value of the shares of
commercial banks as listed on the Nigeria Stock Exchange:
1.4 Research Questions
This study was guided by the following
research questions:
1.
To what
extent does capital budgeting moderators affects the amount of dividend paid to
commercial bank shareholders in Nigeria?
2.
What
effect do capital budgeting moderators have on the profitability of commercial
banks in Nigeria?
3.
When an
investment decision is to be made among Nigerian commercial banks, to what
extent will capital budgeting moderators affects the retained earnings stated
in their yearly financial statements?
4.
If
capital appreciation is a consideration, what effect will capital budgeting moderators
have on the market value of Nigerian commercial banks?
1.5 Hypotheses
The Hypotheses are tested at 0.05 level of
significance.
H01:
Capital budgeting moderators have no
significant effect on dividend payment in
Nigeria
commercial banks.
H01a:
Inflation has no significant effect on
dividend payment in Nigeria commercial banks
H01b:
Political instability has no
significant effect on dividend payment in Nigeria commercial banks
H01c:
Management attitude to risk has no
significant effect on dividend payment in Nigeria commercial banks
H01d:
economic conditions has no significant
effect on dividend payment in Nigeria commercial banks
H02: Capital budgeting moderators does not
significantly affect Profitability of commercial banks in Nigeria
H02a: Inflation does not significantly affect
Profitability of commercial banks in Nigeria
H02b: Political instability does not significantly
affect Profitability of commercial banks in Nigeria
H02c: Management attitude to risk does not
significantly affect Profitability of commercial banks in Nigeria
H02d: Economic condition does not significantly
affect Profitability of commercial banks in Nigeria
H03:
Capital budgeting moderators have no
significant effect on the retained earnings of commercial banks in Nigeria.
H03a:
Inflation has no significant effect on
the retained earnings of commercial banks in Nigeria.
H03b:
Political instability has no
significant effect on the retained earnings of commercial banks in Nigeria.
H03c:
Management attitude to risk has no
significant effect on the retained earnings of commercial banks in Nigeria.
H03d:
Economic condition has no significant
effect on the retained earnings of commercial banks in Nigeria.
H04:
Capital budgeting moderators does not
significantly affect market value of commercial banks in Nigeria.
H04a:
Inflation does not significantly affect
market value of commercial banks in Nigeria.
H04b:
Political instability does not
significantly affect market value of commercial banks in Nigeria.
H04c:
Management attitude to risk does not
significantly affect market value of commercial banks in Nigeria.
H04d:
Economic condition does not
significantly affect market value of commercial banks in Nigeria.
1.6
Justification for the Study
Substantial volume of studies have been
carried out on capital budgeting. But these studies mainly relate to firm
performance and profitability and other aspects of organizational performance.
Some of the literature reviewed during the study include; Lazaridis (2004), in
Cyprus, showed that capital budgeting have significant effect on shareholders’
wealth. However, the study falls short of incorporating the major non-financial
variables of management attitude to risk and political instability.
Also, Ekeha (2011) in Ghana
compared Capital Budgeting Practices by companies in Europe and West Africa to
see whether economic development matters in the choice of which capital
budgeting technique to use, but the study
failed to draw conclusions as regard the importance of the “country
effect” as an explanation for differences in capital budgeting practices
between the European and West African companies, with the believe that there
are some levels of economic factors among the determinants of the choice of
capital budgeting practices. However, the study did not cover the effect of
economic conditions on shareholders’ wealth. Elumilade, Asaolu and Ologunde (2006) in Nigeria carried out a study
on capital budgeting and economic development in third world countries, the
case of Nigeria. However, the study only focused on the public sector in
Nigeria and failed to incorporate other sectors of the economy including the
banking sector in Nigeria.
All the above studies focused on adoption of
proper capital budgeting processes in general investment decisions as a means
of achieving organizational goal. The studies were all carried out outside
Nigeria with the exception of Elumilade, Asaolu and Ologunde (2006), whose
study only focused on the public sector in Nigeria. However, none of the above
studies focused on the banking sector. This research therefore seeks to bridge
this gap by studying the effect of capital budgeting moderators on
shareholders’ wealth in the Nigerian commercial banks. The commercial banks are
in the spotlight because it currently has huge capital base in form of
shareholders’ funds that gives it the opportunity to compete favourably with
other banks in Africa and the world at large. It is a spotlight on the
adherence of bank management to corporate governance principles and policies
especially as it relates to risk management of funds and application of
shareholders’ funds. In essence, the study will find out how management of
Nigerian commercial banks has fared as regards their financial obligations to shareholders.
1.7 Scope
of the Study
This study covered the commercial banks in
Nigeria. There were 22 (twenty-two) licensed commercial banks in Nigeria as at
the time of this study, out of which 14 (fourteen) banks were quoted on the
Nigerian Stock Exchange. Of the 14 (fourteen) banks quoted on the Nigeria Stock
Exchange, only 12 (twelve) banks were selected, representing 54.5% of the
commercial banks in Nigeria but 85.7% of quoted banks. The two banks excluded
from the quoted banks are Jaiz bank and Union bank.
Union bank was excluded because it was used as
pilot study while Jaiz bank, which obtained a regional operating license to
operate as a non-interest bank in 2011, apart from been a recent bank with
fewer published account, was also excluded because it does not have similar
commercial characteristic like the other commercial banks in Nigeria. The data
used comprises both primary and secondary data. Secondary data collected for
this study covered a period of 10 (ten) years (from 2004 to 2013) financial
statements of the banks. This is the period the Central Bank of Nigeria
embarked on major reforms to strengthen the banking industry in Nigeria, which
raises the capital base of the commercial banks to N25b (twenty five billion
naira).
The choice of this period also provide a
uniform platform for performance comparison in the banking industry with
respect to capital budgeting. The inability of some of the banks to raise this
minimum capital requirement led to the reduction of commercial banks in Nigeria
to 22 (Kuye,
et. al, 2013). Commercial banks
were chosen for this study because they perform bulk of the transactions in the
banking industry.
1.8
Significance of the Study
The main purpose of this study is to examine,
determine and critically evaluate the adequacy of shareholder’s wealth through
capital budgeting moderators with a focus on commercial banks in Nigeria. The
study was undertaken in order to increase the body of knowledge on the subject
matter and further advocate the institution and operations of good and
generally accepted principles/or policies of capital budgeting in Nigerian
organizations, especially in the commercial banks. Therefore, the findings of
this study would be useful in the following ways:
It would assist students and researchers in
the understanding of the role of moderators (non financial factors) in capital
budgeting and how it effects the evaluation of investments options. Also, it
will increase the understanding of how available capital can be used to execute
projects, in times of inflation, unfavorable economic conditions and political
instability with a view to maximizing shareholder’s wealth. It would equally
serve as a veritable resource material for future research on capital budgeting
moderators and shareholders wealth,
To the firm’s shareholders, the results of the
study would give an informed knowledge on the process undertaken by banks in
applying funds to projects. Furthermore, the study would reveal how the
application of funds in a project through capital budgeting yield positive
returns that would be able to pay back shareholders for their capital outlay.
The study would further serve as a spotlight
on the adherence of bank management to corporate governance principles and
policies especially as it relates to risk management and application of shareholders’
funds.
1.9 Operationalization of Variables
From the aggregate
proposition about the effect of capital budgeting moderators on shareholders’
wealth to the specific hypotheses, variables of research interest are
operationalized to specify functional relationship and analytical model
depicting the links between respective shareholders’ value and dimension of
capital budgeting.
Y = f (X)
Y = SHW = Dependent Variable
and
X= CBM = the independent variable
Where
CBM = Capital Budgeting Moderators
SHW = Shareholders wealth
Thus:
SHW = f(CBM)
Shareholders Wealth
(SHW) = f [Capital Budgeting Moderators (CBM)]
General Model
SHW = β0
+ β1IN + β2PI + β3MAR + β4EC + µ
Where:
x1 = IN
= Inflation
x2 = PI = Political Instability
x3
=MAR=Management Attitude to Risk
x4 =EC =Economic Conditions
Functional Relationships
y1 = DPS
= f (IN, PI, MAR, EC) …………………. (1)
y2 = PRF = f (IN, PI, MAR, EC) …………………. (2)
y3 = RE = f (IN, PI, MAR, EC) …………………. (3)
y4 = MKV = f (IN, PI, MAR, EC) …………………. (4)
Where:
y1= DPS = Dividend per Share
y2= PRF = Profitability
y3= RE = Retained Earning
y4= MKV = Market Value
1.10.
Operational
Definition of Terms
Capital Budgeting: Capital budgeting is the strategy and procedures used to determine a
firm’s expenditure on assets whose income stream is projected to extend beyond
a financial year.
Capital budgeting Moderators: are mainly non financial factors that affects investor’s decisions or
that determine the extent an investment or project turns out. In this study the
capital budgeting moderators are inflation, political instability, management
attitude to risk and economic conditions.
Commercial banks: A
financial institution or money deposit bank that furnish services, such as
acceptance of deposits, loans disbursement, mortgage lending, and supply of
basic investment products like savings accounts. Eg. GT bank, First bank.
Dividend per Share: This is the portion of profit distributed to shareholders based on the
number of shares held by each investor in a business.
Economic Conditions: this deals with the economic activities
and monetary policies (harsh) that impact the country and financial corporate
sector. A monetary policy decision that cuts interest rate, for example, lowers
the cost of borrowing, and impact investment.
Inflation: this
limits financial decision making. It entails a condition of unstable price,
i.e. the instability of economic indices. Inflation depletes the purchasing
power of the currency thus affecting actual value of the projected future cash
flow used in investment appraisal. In a non-inflationary
world, funds loaned at a rate of interest return at a rate equal to the stated
or nominal rate of interest.
Management Attitude to Risk: this is the level
of optimism or skepticism managers can express in investment in times of crisis
either perceive or real. This occurs as managers intend to balance risks and
rewards.
Market Value: this
is measure of shareholder’s wealth. Market
analysts
generally use this term to pinpoint an organizations size. Also, several stock
market indexes are measured by this term.
Political Instability: Political stability is a situation where there
is constant and frequent change of government and distrust in continuity of
government parastatals. It also includes
a situation of constant violence and unrest.
It is one of the major factors that influences decision on where to
invest and nature of investment. In an economy where political instability is
prominent, viable investment opportunity will be minimal.
Profitability: It is a measure of shareholder’s
wealth. It measures the financial success of the banks in relation to the
capital invested in it. The Net profit after tax is used to determine the
profitability of the bank (Pimentel, Zuniga & Morrison, 2005).
Retained Earnings:
This is the portion of profit not distributed to shareholders. Earning retained
is reinvested by the company. Retained earnings are an indicator of
shareholder’s wealth. It shows the financial performance of a firm. It is a
capital that is not distributed to shareholders but retained for expansion and
recapitalization.
Shareholders Wealth: A process that
increases the current net value of business or shareholder
capital, with the objective of bringing
in the highest possible return. It is measured by retained earnings,
market value, dividend per share and profitability.
================================================================
Item Type: Ph.D Material | Attribute: 191 pages | Chapters: 1-5
Format: MS Word | Price: N3,000 | Delivery: Within 30Mins.
================================================================
No comments:
Post a Comment