Institutional Ownership and Financial Performance of Quoted Building Materials Firms in Nigeria

International Journal of Research and Scientific Innovation (IJRSI) | Volume VI, Issue V, May 2019 | ISSN 2321–2705

Institutional Ownership and Financial Performance of Quoted Building Materials Firms in Nigeria

Yakubu Abubakar¹, Danjuma Umaru² and Adejoh Daikwo³

^1,2Department of Accounting, Ahmadu Bello University, Zaria, Nigeria.
³College of Education, Gidan Waya, Nigeria.

Abstract: – This study examines the impact of institutional ownership on financial performance of quoted building materials firms in Nigeria. The population of the study consists of six (6) firms quoted on the Nigerian stock exchange as at 31st December 2016 out of which four (4) firms were selected using two criteria which are company that made available their annual report of thirteen (13) years and company quoted on the Nigerian stock exchange before 2004. The study uses multiple regressions as a tool for analysis and secondary source of data analysis. The result of the study revealed that institutional ownership impacts positively significantly on financial performance of quoted building materials firms in Nigeria. The study concludes that institutional ownership affects financial performance of building materials firms in Nigeria and recommended that Security and exchange commission should encourage potential institutional investors in the building material industry to invest in long term investment.

Keywords: Institutional ownership, leverage, firm size and financial performance.

I. INTRODUCTION

The Institutional shareholding has continued to dominate capital market. Empirical evidence on the effect of institutional shareholding and accounting issue are very limited. The result show that the presence of institutional investors lead to higher firms’ financial performance. Despite the fact that institutional investors have more expertise, resource and ability to control and monitor management to enhance firms’ financial performance, they try to prevent them from hiding corporate resource to opportunistically manipulate earning as corporate performance is related with institutional ownership (Abdul, 1999).
The relationship between institutional ownership and firm performance is the fact that institutional owners have greater incentive to monitor managers because of the substantial amount of shares invested by them in the company. Also, large institutional owners have the opportunity, resources, and ability to monitor, discipline, and influence managers. This corporate monitoring by institutional owners can result in managers focusing more on corporate performance and less on opportunistic or self-serving behavior.

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