Impact of Corporate Ac ons on Stock Returns of Listed Deposit Money Banks in Nigeria

This study examines the impact of corporate actions on stock returns of 13 listed Deposit Money Banks in Nigeria, focusing on six key corporate actions: dividend announcements, bonus issues, stock splits, stock reconstruction, rights issues, and initial public offerings.

Secondary data covering the period from 2017 to 2023 were obtained from the listed deposit money banks. Data collected are analyzed using an ex-post facto research design, incorporating event study methodology and regression analysis. Six research hypotheses are formulated to assess the impact of six key corporate actions on stock returns. Regression and correlation analyses are employed to analyze stock price reactions to these actions.

Results reveal that dividend announcements, rights issues, and initial public offerings have significant positive impact on stock returns. Bonus issues and stock splits have positive impacts, primarily enhancing liquidity and marketability, thereby indirectly impacting stock returns. Conversely, stock reconstruction exhibited a negative relationship with stock returns.

The study recommends that listed banks strategically utilize corporate actions to maximize stock performance. Specifically, managers should prioritize consistent dividend payouts and effective communication of rights issues, as these actions have a significant positive impact on stock returns. Since the study found that stock reconstruction has a negative impact on returns, banks are advised to limit the use of this action and ensure transparent disclosure of recovery plans when it is necessary. Policymakers should provide clear guidelines on corporate actions and strengthen disclosure requirements to enhance investor confidence.