CORPORATE INVESTORS AND UNCERTAINTY MEASURES OF DEPOSIT MONEY BANKS IN NIGERIA

This study wants to identify the forces that drive the stock market by investigating how corporate investors react to certainty and uncertainty measures in new financial statement of deposit money banks in Nigeria. Using Ralph’s sampling method as benchmark; data were randomly collected from Nine (9) Nigerian banks covering the period of 2006 to 2013. The Dependent variables used in this study was Share prices as a proxy to measure corporate investors’ reaction. There were two set of independent variables used in this research; firstly, volatility of Book value and Earnings as proxy for uncertainty in new financial statements and secondly, balance sheet and income statements figures of Book value and Earnings were used as proxy for certainty in new financial statements. The researcher utilized Olhson model in the analysis of data. This is because Investment is sacrifice of present for future benefit and the future is uncertain. The present is relatively well known, whereas the future is always enigma. Uncertainty exists in financial statements when measurements were largely based on estimates, judgments, and models rather than exact depictions. Corporate investors need to understand those uncertainty and certainty measures and assess their potential impact on share prices. It was found that there is not significant relationship between the uncertainty measures in financial statements and share prices, which implied that corporate investors do not react to uncertainty measures in financial statements. When uncertainty measures was removed, we found that there is significant relationship between certainty measures in financial statements and share prices,  which implied that corporate investors react positively to good news and otherwise to bad news. The following recommendation were offered; that corporate investors should take the advantage of certainty measures in financial statements by identify undervalued stock that deviate from its actual worth. This will enable them to have above normal returns compared to investors that use either chartist or random walk theory. On uncertainty measures, it implied that Nigeria capital market follows random walk theory. Therefore, corporate investors should not react to uncertainty measures in financial statements because future share prices could not be predicted using uncertainty measures. This study was restricted to evaluating and determining the effect of uncertainty and certainty measures financial statements on the corporate investors’ decisions in the Nigerian banks.