FINANCIAL DETERMINANTS OF FIRM VALUE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

1Hirhyel Ibrahim Abba, 2Lukman O. Lawal Ph.D, ACA, PGDE, 3Abdon Ahmed Sadah

Abstract

Industrial growth is a major factor for the economic survival of any country, and this growth is
achieved by the successful operation of companies in other to maximize firm value. However, the
recent financial crises in the banking sector which is partly due to inadequate capital and operational
problem has raised concern about the value of the firms. This study examined the financial
determinants of firm value of listed deposit money banks in Nigeria. Firm value was the dependent
variable proxed by Tobin's Q and financial determinants the independent variables proxed by
profitability, investment decision, funding decision, dividend payout ratio and firm size. The study
adopted ex-post factor research design and data were extracted from the published annual reports
and accounts of the 13 banks that represent the sample of the study for the period of sic (6) years
covering 2013-2018. The study used multiple panel data regression as a technique of data analysis.
The result shows that profitability, funding decision, and dividend policy, has a significant positive
influence on firm value of listed deposit money banks in Nigeria. On the other hand, investment
decision had no significant effect on firm value of the banks. This finding implies that the more deposit
money banks in Nigeria put in measures that will increase its profitability, maintain debt to optimal
level, share dividend and increase the size of its firm, it will result to an increase on firm value.
Therefore the study concluded that profitability, funding decision, and dividend policy have
significant influence on the firm value of the listed DMBS in Nigeria. The study recommended that the
managers of deposit money banks in Nigeria should employ measure that will improve profitability in
other to maintain a stable payment of dividend as well as optimally source for its' debt financing.