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Papers by Ibrahim Barde
Bayero International Journal of Accounting Research, 2017
This paper examines the impact of leverage on the share prices of listed deposit money banks in N... more This paper examines the impact of leverage on the share prices of listed deposit money banks in Nigeria Stock Exchange. The study is guided by the Efficient Market Hypothesis/Random Walk theory. The study uses panel data of 15 firms in the banking sector over {he period 2006-2015. Share price was proxied by the average yearly share prices of selected banks while leverage was measured as the debt-equity ratio. Two control variables were adopted: firm size proxied by total assets and firm age proxied by number of years since stock exchange listing. An Ordinary Least Square (OLS) regression model was used to examine the relationship between the study variables. The results indicate that while debtÂequity ratio has a negative insignificant relationship with share price, firm size and age have significant positive and negative impacts (respectively) on the share price. This is because a highly levered balance sheet opens the firm up to risk of refinancing; even when it grants the firm easy access to harnessing much capital for investment, the firm still has to contend with interest expenses which absorb the expected profit thereby bring down the share price. We conclude that the similar empirical results in literature are unique to the financial sector, a risk class that is highly regulated and has high concentration of leverage ratios. This clear impact of financial leverage on company's value can assist the financial analyst in predicting futurefirm 's value.
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Bayero International Journal of Accounting Research, 2017
This paper examines the impact of leverage on the share prices of listed deposit money banks in N... more This paper examines the impact of leverage on the share prices of listed deposit money banks in Nigeria Stock Exchange. The study is guided by the Efficient Market Hypothesis/Random Walk theory. The study uses panel data of 15 firms in the banking sector over {he period 2006-2015. Share price was proxied by the average yearly share prices of selected banks while leverage was measured as the debt-equity ratio. Two control variables were adopted: firm size proxied by total assets and firm age proxied by number of years since stock exchange listing. An Ordinary Least Square (OLS) regression model was used to examine the relationship between the study variables. The results indicate that while debtÂequity ratio has a negative insignificant relationship with share price, firm size and age have significant positive and negative impacts (respectively) on the share price. This is because a highly levered balance sheet opens the firm up to risk of refinancing; even when it grants the firm easy access to harnessing much capital for investment, the firm still has to contend with interest expenses which absorb the expected profit thereby bring down the share price. We conclude that the similar empirical results in literature are unique to the financial sector, a risk class that is highly regulated and has high concentration of leverage ratios. This clear impact of financial leverage on company's value can assist the financial analyst in predicting futurefirm 's value.
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