The effect of cash flow on share price of listed oil and gas firms in Nigeria
Keywords:
Financing activities, Investment activities, Net Cash flow, Oil and Gas, Operating activities, Share priceAbstract
This study investigates how cash flow affects the share prices of oil and gas companies listed in the Nigerian Exchange Group Limited. Secondary Data from 10 of such firms was extracted from their annual reports spanning 2011 to 2023. Using the Generalised Method of Moments, the analysed data of the study revealed several findings. Firstly, cash from operating activities displayed a negative and insignificant impact on share prices at a 1% level of significance. Conversely, cash from investment activities showed a positive and significant effect on share prices at 1% level of significance. Cash resulting from financing activities, however, exhibited a negative and insignificant effect on share prices at 1% level of significance. Additionally, net cash flow shows a positive yet insignificant effect on share prices at 1% level of significance. This suggests that Nigerian oil and gas firms should prioritize investment activities that yield robust cash flows and effectively communicate their growth strategies to investors. Moreover, investors are advised to consider various factors beyond just cash flow when making investment decisions in this sector. Regulatory bodies might also contemplate initiatives aimed at improving transparency and boosting investor confidence within the Nigerian oil and gas market.