Impact of Financial Performance on Share Prices of Listed Shariah-Compliant Companies on the Nigerian Stock Market

Abstract

The study examined the relationship between financial performance and the share prices of Shariah-compliant companies on the Nigerian stock market. The study adopts an ex-post facto research design, analyzing secondary data from 2014 to 2023. Data was collected from the companies' annual reports, with annual closing share prices as the dependent variable and financial performance metrics such as earnings per share (EPS), dividend per share (DPS), and current ratio (CR) as the independent variables, alongside GDP growth and inflation as control variables. The data was analyzed using descriptive statistics, correlation analysis, and fixed-effects regression with company-level cluster-robust standard errors. Diagnostic tests, including multicollinearity, unit root, serial correlation, and Hausman specification tests, were conducted. The findings indicate positive and statistically significant within-company associations between EPS and DPS and share prices, while CR has a statistically significant negative association. Inflation and GDP growth are not statistically significant in the robust fixed-effects specification. The findings should be interpreted as within-company associations rather than causal effects.