Firm Fundamentals and Stock Price of Quoted Manufacturing Firms in Nigeria

Financial risk, which is influenced by a firm's debt-to-equity ratio, is a fundamental factor that can affect share price and firm value. A firm with high leverage (high debt relative to equity) that makes poor investment decisions, failing to generate positive net present value (NPV) or adequate return on investment (ROI), is more likely to face financial and bankruptcy risks. This study examined the effect of firm fundamentals on the share prices of listed manufacturing companies in Nigeria. As corporate entities on the Nigerian Stock Exchange, the share price of these firms reflects their market value and investment appeal; they can also be influenced positively or negatively by internal financial indicators. The secondary data from 2016 to 2024 was sourced from the financial statements of ten selected quoted manufacturing firms in the Nigerian Stock Exchange Group. The study employed static panel regression to analyse the relationship between selected firm fundamentals and stock prices. The study was anchored on the agency theory. The findings revealed that asset growth and return on equity have a significant positive impact on share price at (β: 823.6; p<0.05) and (β: 30.98; p<0.05). Also, cash flow yield, dividend payout, market capitalisation, and price-to-earnings ratio have a significant negative effect on share price at (β: -962.5; p<0.05), (β: -420.8; p<0.05), (β:-1.53; p<0.05) and (β:-7.73; p<0.05). The study concluded that investors value firms that expand their asset base and efficiently generate profits from shareholders' equity. It was recommended that strategic and tactical level management should focus on strategic investments that increase productive capacity and generate higher returns on equity.