Effect of Social and Economic Reporting On Market Value of Deposit Money Banks in Nigeria

Authors: Jennifer M. Ipevnor; Professor Ioraver N. Tsegba; Dr. Kwaghfan Aondoakaa
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This study examined the effect of social and economic reporting on market value of deposit money banks (DMBs) in Nigeria. To achieve the study objective, ex-post facto research design Was adapted and secondary data were extracted from the annual reports and accounts of 12 sampled banks listed in Nigeria for eight years from 2012-2019. Content analysis was used to extract data for the independent variables namely: Social reporting (SOC) and economic reporting (ECO). The variables were used to create an interacting variable namely: Social-economic reporting (SOCECO) to further investigate bi-lateral relationships. Diagnostic tests such as normality test, test for heteroscedasticity, multicollinearity and Ramsey Reset test for model specification, among others, were carried out to determine the suitability or otherwise of the test statistics. Two models namely; Tobin's Q and Stock Return Model were examined in the study. Panel regression analysis was used to analyse the data. The result of the Hausman test for randomization of panel result showed that the random effect regression is most suitable for the study. The results show that for objective one, social reporting has a positive effect on market value proxied by Tobin's Q while it has a negative effect on Stock Returns. The result of objective two indicates that economic reporting has a negative effect on the two dependent variables of the study also statistically significant for the first model (TQ) but insignificant for SR second model. The interaction between social and economic reporting shows a positive effect on Tobin's Q and Stock Return but the effect is not statistically significant (p>0.05), the effect is in line with a priori expectation. The study, concluded that social-economic reporting in the banking industry improves the value of the shares of the sampled banks. The study, therefore, recommended among others that banks should invest in socially responsible activities in order to sustain their business for the benefit of the shareholders.