Exploring the Effect of Retained Earnings on the Share Prices of Listed Information and Communication Technology Companies in Nigeria (Zenodo)

Summary

• The study uses annual report data of selected listed ICT firms in Nigeria over ten years (2015–2024).p.1
• Retained earnings had a positive and statistically significant impact on stock prices (β = 7.6360, t = 3.7683) under the Random Effects model.p.1
• Return on Equity had a strong, statistically significant positive influence on share price (β = 56.5855, t = 5.4339).p.1
• The dataset has 70 firm-year observations.p.5
• The Random Effects model fitted best, with R² of 0.6272, adjusted R² of 0.5858 and F-statistic of 17.9546.p.7
• Earnings per share showed a negative but statistically insignificant effect on share prices (β = -0.1912, t = -0.8910).p.7

Key insights

1. Retained earnings, ROE and ROA are positive and statistically significant determinants of share prices in the Nigerian ICT sector.p.8
2. Return on Assets positively and significantly influenced share price (β = 0.1113, t = 8.1013).p.7
3. The Random Effects model accounted for 62.72% of the systematic variance in share prices.p.8
4. The study concludes that earnings retention is an effective, low-risk internal financing strategy that enhances corporate value.p.8
5. ICT firms face rapid technological depreciation and high capital expenditure needs, so robust retained earnings allow them to execute high-value projects without increasing financial distress risk.p.4
6. The authors recommend that listed ICT firms retain an adequate proportion of net profit for reinvestment rather than distributing all earnings as cash dividends.p.8