Price-Swinging Stock Market Fundamentals: Nexus and Contemporary Features

  • Prince Umor C. Agundu Department of Banking & Finance, Federal University Wukari, Taraba State, Nigeria
  • James T. Wula Department of Accounting, Federal University Wukari, Taraba State, Nigeria
  • Usman Mamuda Musa Department of Accounting, Federal University Wukari, Taraba State, Nigeria
Keywords: Financial Statements, Market fundamentals, Stock Prices

Abstract

The factors which determine stock prices in capital markets are many and diverse; hence researchers in the academic fields of accounting and finance intermittently undertake to track them with contextual emphasis. From the philosophical basics to the more rigorous econometric dispositions, analysts in different schools of thought had ventured in this regard and came up with divergent outcomes. Some factors did commonly appear for most stock markets, while various conditions surrounding the respective scenes accounted for environmental dynamics.  This reinforces the truism that each market has acclimatized rules and regulations, country peculiarities, and investor typologies; all of which provide basis for uniqueness. In this conceptual analysis, the factors that feature as dominant determinants of stock prices are Earnings per Share (EPS), Dividend Per Share (DPS), and Price-Earnings Ratio (P/ER); among which the last is the most and not the least. It further attests to the prevailing value relevance of financial statement information emanating from corporate accounting reports; hence the imperativeness of stock market regulators sustaining the rules that make for adherence to best practices. The alternative to informational reliability is institutional fragility; because when investors’ confidence erodes, liquidity squeezes, efficient markets crashes, and in turn, investors withhold investments. It, therefore, requires market regulatory/administrative mechanisms to be focally directed at enhancing reportorial compliance and compelling higher due diligence, accountability and responsibility in line with international standards.

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Published
2018-08-04
How to Cite
Agundu, P. U. C., Wula, J. T., & Musa, U. M. (2018). Price-Swinging Stock Market Fundamentals: Nexus and Contemporary Features. Australian Finance & Banking Review, 2(2), 1-6. Retrieved from http://www.cribfb.com/journal/index.php/afbr/article/view/78
Section
Articles