The Impact of Book Value of Equity and Abnormal Earnings on Investment Decisions in Nigerian Banks

The explore the impact of book value of equity and abnormal earnings on investment decision of Nigerian banks. Secondary data was extracted from the financial statement of the banks from 2015 to 2024. The data of the study was analysed using regression analysis. The study explanatory variables are book value per share and abnormal earnings, the study considered firm size and firm financial leverage as the control variables. The empirical results revealed that book value per share has a strong, positive and significant effect on firm value, indicating that investors place substantial emphasis on the net asset position of banks when making investment decisions. The findings of the study indicate abnormal earnings indicate a positive insignificant relationship. The study concludes that financial statements are decision-useful for investment appraisal in Nigeria, but investors rely more heavily on balance sheet indicators particularly book value than on earnings measures. The study suggests that investors place greater emphasis on book value per share when assessing bank stocks, encourages bank managers to improve transparency regarding equity positions, and urges regulators to reinforce disclosure standards to enhance the relevance and reliability of disclosed information.

Book Value of Equity, Abnormal Earnings, Firm Performance and Investment Decision

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