EFFECT OF CORPORATE RESERVE ON THE FINANCIAL …cird.online/ESSAJ/wp-content/uploads/2019/08/Kdl-19-996-CIRD-ESS… · Double Blind Peer and Editorial Review International Referred

Economics And Social Sciences Academic Journal

Vol.1, No.7 July- 2019

ISSN (5282 -0053);

p –ISSN (4011 – 230X)

Economics and Social Sciences Academic Journal

An official Publication of Center for International Research Development Double Blind Peer and Editorial Review International Referred Journal; Globally index

Available @CIRD.online/ESSAJ: E-mail: [email protected]

pg. 1

EFFECT OF CORPORATE RESERVE ON THE FINANCIAL

PERFORMANCE OF OIL AND GAS FIRMS IN NIGERIA

Eneh, Edith Nkiruka, M.Sc., Onyekwelu, Uche Lucy, Ph.D. and Igweonyia, Virginia

Nnenna, M.Sc.

Department of Accountancy, Faculty of Management Sciences, Enugu State University of Science &

Technology, Enugu

Correspondence Author: Uche Lucy Onyekwelu,

Abstract: This study empirically evaluated the effect of corporate reserve on financial performance of oil and gas firms in Nigeria. It

adopted the ex post facto research design as secondary data were used for the study. The study spanned 14 years period 2003 to 2017.

Descriptive statistics and graphical represented was firstly employed using E-Views software to check for the trends, linearity or

otherwise of the data. Regression model was applied in determining the extent of the effect exerted on corporate reserve by depreciation

provision, amortization fund, employee benefit and return on equity. The main theories that underpinned the research were the Agency

Theory, Pecking Order Theory and Signaling Theory. The result of the analysis shows that depreciation provision, amortization fund,

employee benefit and return on equity does not exerts a significant and positive effect on Retained Earning of Nigeria Oil and Gas firms.

The overall finding of this study tends to support the pecking order and signaling Theory. This study therefore conclude that depreciation

provision, amortization fund, employee benefit and return on equity does not have positive affect on the retained earnings of the Nigerian

Oil and Gas firms. The study therefore recommends that firms in Nigeria oil and gas Industry should strive to improve on their retained

earnings so as to enhance depreciation provision in a consistent basis and Management of Nigeria oil and gas firm to improve on retained

earnings so as to enhance amortization of fund by allocating prudently to intangible assets over a period of time.

Keywords: Corporate Reserves, Financial Performance, Oil and Gas Firms, Nigeria

1.1 Introduction

Establishing a cushion for the rainy days in the life of an

organization is very important to its survival. Most often than

not, this soft landing for the firms are created in the forms of

reserves to help it embark on projects that will help propel the

organization. To this extent, corporate reserves can be defined as

liquid assets (cash) held by firms in order to meet expected future

payments and/or emergency needs. Companies all over the world

are increasingly becoming aware of the importance of financial

management, with emphasis on investment and retention

policies, as a veritable tool for efficient business management. It

is the responsibility of the management to establish these

corporate policies for effective and efficient internal control,

performance evaluation and reserve management. Business

managers evolve flexible and feasible financial policies to ensure

the realization of its corporate targets (Nwude, 2007).

Reserves are made by companies mainly for investment into

areas that promises some growth opportunities. This may include

the acquisition of plant and machineries, establishment of new

production lines, diversification of products and business,

establishment of new branch offices, acquisition of a company

to widen its distribution base and so on. Activist stockholders

and corporate governance specialists express concern that large

cash holdings reduce disciplinary pressure on managers and

expose them to the temptation of spending cash even when

profitable investment opportunities are not available. Mikkelson



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 2

and Partch (2003) documents also that managers of cash-rich

firms cite the benefits of having cash on hand as a reserve to fund

large capital investments and expenditures, resulting from less

internal financing costs. The intention to fulfill the expectations

of investors and financial markets increasingly dominates

reserve accumulation motives which, as Shayne(2013) opines, is

the cornerstone of financial flexibility.

Companies are expected to strategically allocate their

assets/wealth to meet its long term investment need that could

guarantee stability and growth and optimize the risk/return trade-

off. In support, Dominguez (2011) affirms that, although it is to

be expected that a strategic asset allocation decision will be

effective over the medium to long term, the allocation might be

reviewed and revised in the light of changing investment

opportunities. Asset allocation decisions could however be

pursued through sound retention and investment policies in

terms of the magnitude and nature of reserves and provisions to

be created.

Retained earnings (revenue reserves) which as opine by Kim and

Suh (2010) is the accumulated net income that is retained by a

firm rather than distributed to its shareholders as dividends, is

one of the key retentions created by companies especially in the

oil and gas sector. Retained earnings is the percentage of net

earnings not paid out as dividends, but retained by the company

to be reinvested in its core business or to pay debt while

Investopedia (2014) describes it as retained surplus or retention

ratio which equals the beginning retained earnings plus net

income less dividends. Dividend decision also involves the

determination of the proportion of a company’s earnings (profit)

to pay out as dividend to the shareholders or retained within the

firm for self-financing, as opine by Onuorah and Ezeji (2013).

Oil and gas firms in Nigeria especially Oando Plc, Conoil and

several others create capital reserve for long-term capital

investment projects or other large anticipated future

expenditures. The reserve is made to guarantee availability of

fund to finance their anticipated projects which might include

fixed asset replacements that are neither expenditure on purchase

of goods nor period expenses. The two oil and gas firms

mentioned above are some of the leaders of the highly capital

intensive industry in Nigeria which largely automated their

production lines. They invest so much on heavy equipment and

fixed assets resulting in huge capital outlay which has to be

accumulated over time.

Depreciation provisioning is another key retention made by oil

and gas firms in Nigeria. It is the systematic allocation of the

depreciable amount of an asset over its useful life. Provision for

depreciation is a charge against profit which has to be made

whether the company is making profit or accumulating losses. It

does not directly result in a cash outlay. However, an

organization which does not make reasonable estimation of its

depreciation is making decisions blind to its long-term financial

situation (Iga, 2008). The extent to which provision for

depreciation is made is determined by factors such as service life

of assets which is influenced by the operating environment,

company’s service standards, production targets from the assets,

company’s maintenance culture, asset replacement policy,

method of calculating the provision for depreciation and

procedure for asset valuation.

Considering that some of these retentions could exert significant

impact on financial performance and shareholder’s equity of

firms in Nigeria oil and gas industry, the study attempts to

ascertain whether there is a relationship as well as the strength of

the relationship, where it exists, between corporate reserves and

selected industry financial performance indicators. Such a

quantitative process, in our opinion, will be of tremendous

importance in determining the nature and magnitude of corporate

reserves with emphasis on retained earnings and depreciation

provisions as they individually and collectively influence

performance and investments in Nigeria oil and gas firms.

1.2 Statement of the Problem

Debates often go on among scholars asking if corporate reserves

would really serve to enhance the financial performance of

organizations. These scholars are bothered with the issue of

creating corporate reserves and if these reserves would positively

impact the performance. Some scholars argue that setting some

funds aside after dividends are paid as it provides available funds

for funds to be employed. However others are of the view that

any reserve created will have a neutral effect on the financial

performance. On the contrary opposing views exist that reserves

are often created to disallow firms from paying good dividend to

shareholders and this may negatively affect the reputation of the

organization.

However, each of these modes of financing has implications.

When fund is raised through the sale of equity shares, it tends to

dilute the pattern of ownership and by extension, could lead to

monumental changes in board composition and executive



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 3

management. Sourcing fund through bank loan requires

collateral and accumulates interest while fixed assets taken up on

lease also attracts lease rental just as hire purchase accumulates

interest with the bigger risk of repossession in case of default.

On the other hand, provision for depreciation and corporate

reserves are two main sources of internal financing and firms

prefer internal financing. It has although been observed that

retained earnings are key item in shareholders’ equity, but

corporate finance literature has paid little attention to this

variable. It has also been opined by many scholars that unless a

firm consciously and explicitly intends not to replace certain

assets, or is prepared to operate with less or lower standard assets

and provide less or lower standards of services in future, it should

always strive to ensure that operating revenue matches operating

expenses, including depreciation costs which results in a

reduction in the carrying value of assets in an entity’s balance

sheet.

It is in the light of the above submissions that this paper appraises

the effect of corporate reserves on financial performance of firms

in Nigeria using the Oil and Gas firms.

1.3 Objectives of the Study

The main objective of the study is to evaluate the effect of

corporate reserves on financial performance of oil and gas firms

in Nigeria.

The specific objectives of the study are as follows:

1. T

o appraise the effect of retained earnings on depreciation

provision of firms in Nigeria oil and gas industry.

2. To investigate the extent of effect to which retained

earnings exert on amortization fund of firms in Nigeria oil and

gas industry.

3. To examine the extent to which retained earnings affects

employee benefits of firms in Nigeria oil and gas industry.

4. To investigate the extent of effect to which retained

earnings exert on return on equity of firms in Nigeria oil and gas

industry.

1.4 Research Questions

1. What is the effect of depreciation provision on retains

earnings of firms in Nigeria oil and gas industry?

2. How does amortization fund affected by retain earnings of

firms in Nigeria oil and gas industry?

3. How employee benefits affect does retains earnings of

firms in Nigeria oil and gas industry?

4. To what extent is return on equity affected by retains

earnings of firms in Nigeria oil and gas industry?

1.5 Statement of the Hypotheses

1. Retain earnings does not have significant effect on

depreciation provision of firms in Nigeria oil and gas industry.

2. Retain earnings does not have significant effect on

amortization fund of firms in Nigeria oil and gas industry.

3. Retain earnings does not have significant effect on employee

benefit of firms in Nigeria oil and gas industry.

4. Retain earnings does not have significant effect on return on

equity of firms in Nigeria oil and gas industry.

1.6 Scope of the Study

The study covers a period of fifteen years (2003 to 2017) and the

researcher made use of the four firms in Nigeria oil and gas

industry which are listed on the Nigeria Stock Exchange as at

1stJanuary, 2003 and as at 31st December, 2017, still have their

shares actively participating in trading activities on the floor of

the Nigeria Stock Exchange. They include Total Oil Nig. Plc,

Mobil Nig. Plc, Conoil Nig. Plc, MRS Oil Nig. Plc and Oando

Oil Nig. Plc. The choice of the period and the firms was based

on data availability.

REVIEW OF RELATED LITERATURE

2.1

Conceptual Framework

2.1.1 Corporate Reserves

Corporate reserve also known as retained earnings has been

widely conceptualized by many authors. Chasan (2012) posits

that retained earnings, otherwise known as revenue retentions or

retained surplus, refer to the portion of a company’s profits that

is kept for reinvestment into the business or for debt payments,

instead of being paid out as dividends to shareholders. Agreeing

with this submission, Akparhuere, Eze and Unah (2015) define

retained earnings as “retention ratio” or “retained surplus”,

which represent “the percentage of net earnings not paid out as

dividends but retained by the company to be reinvested in its core

business, or to pay debt. This is recorded under shareholders’

equity on the statement of financial position”. The formula is

expressed as:

Retained earnings (RE) = Beginning RE + Net Income –

Dividends

In his own contribution, Thirumalaisamy (2013) postulates that

retained earnings are the most important sources of financing

growth of a firm. The level of internal funds conveys information



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 4

about growth prospects of companies. He further says that

retained earnings are a major source of finance for growth of

companies. This is because, there is no transaction or bankruptcy

cost associated with retained profits. Thus, potential growth

opportunities of a firm necessitate a greater demand for

internally generated funds.

2.1. 2 Depreciation Provision

Expenditure on assets of the business like furniture, fixtures and

fittings of the shop,motor vans, machines and equipments are

neither expenditure on purchase of goodsnor expenses.

Expenditure of this nature gives service to the business for many

years and thus called fixed assets (STS, 2010). Iga (2008) defines

depreciation as an accounting concept that measures and spreads

the cost associated with the using up of an asset over its useful

life while Australian Accounting Standards define depreciation

as the systematic allocation of the depreciable amount of an asset

over its useful life.

2.1.3 Amortization Fund

Onojah and Unegbu(2013) defined amortization is the deduction

of capital expenses over the asset's useful life. In this case,

amortization measures the consumption of the value of an

intangible asset such as goodwill, a patent or a

copyright.Amortization is like depreciation, which is used for

tangible assets, and depletion, which is used for natural

resources. When businesses amortize expenses, they help tie an

asset's costs to the revenues it generates. For example, with a

large asset, the business reaps the rewards of the expense for

years. Thus, it writes off the expense incrementally over the

useful life of that asset, tangible or intangible. By contrast, if a

company buys a ream of paper, it writes off the cost in the year

of purchase and generally uses all the paper the same year.

2.1.4 Employee Benefits

Employee benefits are defined as a form of compensation paid

by employers to employees over and above regular salary or

wages (Doepke, 2004).Employee benefits come in many forms

and are an important part of the overall compensation package

offered to employees. It can also be seen as indirect, non-cash,

or cash compensation paid to an employee above and beyond

regular salary or wages.Some employee benefits are required by

law. For example, employers are required to make payments on

employees' behalf for Social Security and Medicare. Employers

must also pay for unemployment benefits on employees'

behalf.Other benefits are offered by employers to enhance the

compensation provided to employees. Employee benefits such as

health insurance, life insurance, paid vacation, and workplace

perks are common offerings used to recruit and retain

employees.

2.1.5 Return on Equity (ROE)

Return on Equity is one of the all-time favourites and perhaps

most widely used overall measure of corporate financial

performance (Rappaport 1986). This was confirmed by Monteiro

(2006) who stated that ROE is perhaps the most important ratio

an investor should consider. The fact that ROE represents the end

result of structured financial ratio analysis, also called Du Pont

analysis (Stewart, 2003) contributes towards its popularity

among analysts, financial managers and shareholders alike.

DuPont analysis also states that ROE is one of the most

important financial ratios and profitability metrics which is often

said to be the ultimate ratio or the ‘mother of all ratios’ that can

be obtained from a company’s financial statement as it measures

how profitable a company is for the owner of the investment, and

how profitably a company employs its equity. Black, Wright and

Davies (2001) states that shareholder value is created when the

equity returns of a company exceed the cost of that equity and it

can also be described as the present value of all future cash flows,

less the cost of debt. Return on equity seems an appropriate

measure of investment profitability.

2.1 T

heoretical Framework

This study which is on the measures of corporate reserve and

financial performance of oil and gas firms have enlarged

theoretical underpinning such as the Signaling Theory by Ross

(1977),Pecking Order Theory of Myers and Majluf (1984)

andAgency Theory by Jensen and Meckling (1976) and the.

2.2.1 S

ignaling Theory

The signaling theory by Ross (1977), who created a theoretical

model, had its root from the information asymmetry existing

between managers as fund users and shareholders as fund

providers. The theory assumes that managers have access to

more information relating to the value of the firm’s assets than

other outside agents and investors. Therefore managers seek to

use dividend pay-out policies to signal to the shareholders about

the financial performance of their firms. In addition, the firms

could also reveal the strategies adopted in pursuing their vision

and attaining their mission.

https://www.investopedia.com/terms/d/depreciation.asp

https://www.investopedia.com/terms/d/depletion.asp



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 5

2.2.2 The Pecking Order Theory

The Pecking Order Theory of Myers and Majluf (1984) try to

generate ideas that firms will use hierarchy of financing by

prioritizing their sources of financing. It states that firm should

utilize its’ internal funds, that is debt and equity. It documents

that firms prefer internal funds first, debt second and external

equity last and that funding needs and internal funds jointly

determine capital structure decisions. The theory argues that the

more profitable a firm becomes, the lesser it borrows because it

would have sufficient internal finance to undertake its

investment projects. According to the theory, it is only when the

internal financing is not adequate that firms should source for

external finances. The theory tries to capture the cost of

asymmetric information where companies prioritize their source

of financing from internal financing to equity, according to the

law of least effort, or least resistance. This means that firm’s

capital structure chooses to follow a hierarchy; first prefer

internal financing, then choose debt when internal finance is not

available, and only choose equity (debt) as a last resort. The firm

maturity stage shows up because it is believed that new firms

rely more on new equity (or contributed equity) for early growth

whereas mature companies rely more on self-financing through

corporate retentions and are more able to pay dividends as a

result of sufficient growth of earnings.

2.3 E

mpirical Review

3 A

pplying the standard cash-in-advance framework, Retained

Earnings and the Real Effects of Monetary Shocks was examined

by Doepke (2004) who summarized his findings by submitting

that another key feature of an economy is that the business

industry accumulates retained earnings and credits profits and

dividends to the consumers and other stakeholders only with a

delay. This is because the bottom line can only be determined at

the end of the accounting year leading to proposing the year’s

dividend in arrears, thus, the delay. The study concludes that

Retained earnings matter for the transmission of monetary policy

because they affect the overall balance between different uses of

funds in the economy and that corporate profits react quickly to

a monetary shock, whereas dividend payments adjust only after

a considerable delay. Since the shareholders own the firms, in a

frictionless model, they would consider retained earnings as

equivalent to their own savings.

4 I

n a study related to this research, Lintner (1956) found that a

firm’s net earnings are the critical determinant of dividend

changes; and by extension, extent of corporate retentions.

Retentions are mainly made by organizations for investment into

areas that promise some growth opportunities. Mikkelson and

Partch (2003) establish that managers of cash-rich firms cite the

benefits of having cash on hand as a reserve to fund large capital

investments and expenditures, resulting from less internal

financing costs. The intention to fulfill the expectations of

investors and financial markets is the cornerstone of financial

flexibility (Shayne, 2013).

Zaman (2013) studied bank profitability, growth, retained

earnings and size were measured by using multiple regression

and correlation, as potential determinants of dividend policy in

Dhaka Stock Exchange of Bangladesh. The study reveals that

while profitability appears to be a better determinant of bank

dividend policy than a bank’s growth and size, it may not be

concluded that profitability alone is a strong indicator of bank

dividend policy over time in the capital market of Bangladesh.

Furthermore, an evaluation of the relationship between a number

of company selected factors such as free cash flow, growth,

leverage, profit, risk and size and the companies’ dividend

payout ratios, using both an Ordinary least square (OLS) and a

Tobit regression was conducted by Hellström and Inagambaev

(2012). Previous studies were reviewed as well as dividend

theories in order to conclude which factors that potentially could

have an impact on the companies’ dividend payout ratios. The

dividend payout ratios of large caps were found to have a

significant relationship with free cash flow, growth and risk,

while the dividend payout ratios of medium caps have a

significant relationship with free cash flow, leverage, risk and

size.,

5 A

hmed (2000) investigates the relative importance of dividend and

retained earnings to explain the stock price variation in

Bangladesh. The findings reveal that both dividend and retained

earnings influence the stock price and they have their impact

ignoring their usual expectation of stronger dividend impact on

non-growth industries and retained earnings impact on growth

industries. In most cases, dividend hypothesis appears to be

stronger than the retained earnings hypothesis. Dividends

convey valuable information to the investors and it has been



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 6

documented that the managers’ behavior also appears to be

consistent with this view thus supporting Dividend Relevance

Theory (Linter, 1956). Although other alternative exists through

which managers can disseminate information but dividends are

highly visible compared to other announcements in addition to

its credibility of cash signals.

Baloch, Edwin, Kiyanjui, and Kayode (2015) define retained

earnings as portion of net income which is not paid as dividends

to the shareholders. They are rather retained by the firm and re-

invested in the business. They are recorded in the statement of

financial p0sition under the heading of the shareholders’ equity.

The figure of retained earnings is obtained by deducting the

dividend paid from the net income after taxes.

Inyiama (2014) expresses retained earnings as the portion of net

income of a firm that is retained by the firm rather than

distributed to shareholders as dividend. In the event of loss, the

accumulated retained earnings of the firm is reduced by the

amount of the loss. However, if the balance of the retained

earnings account is negative, it may be called retained losses,

accumulated losses or accumulated deficit. Retained earnings

and losses are cumulative from year to year and reported in the

shareholder’s equity department of the corporation’s statement

of financial position.

Ekwe and Inyiama (2014) while citing the work of Segal and

Spivak (1985) on firm size and optimal growth rate by

reinvestment of retentions, noted that by retaining earnings and

reinvesting them in the firm, the firm can change the

characteristics governing the stochastic process, thereby

increasing the probability of multiplication and reducing the

probability of disappearance. Consequently, the firm’s decision

variable is the size of the retained earnings.

Thirumalaisamy (2013), supports that retained earnings are

determined as remainder of profits, after dividends are paid out;

it is changes in profits than current level which determine how

much should be retained by a firm; funds for investment are not

very strong in determining the amount of profit retentions by

firms. He concludes, as cited, that retained earnings are

determined residually and investment decisions are to play a

minor role in allocation of profits.

Uwuigbe (2013) investigated the determinants of dividends

policy in the Nigerian stock exchange market; using the

judgmental sampling technique and regression analysis method..

The variables considered as determinants were financial

performance of firms, firm size, financial leverage and board

independence. The analysis reveals that there is a significant

positive relationship between firms’ financial performance,

retained earnings, size of firms and board independence on the

dividend payouts decisions of listed firms in Nigeria.

Thirumalaisamy (2013) postulates that retained earnings are the

most important sources of financing growth of a firm. The level

of internal funds conveys information about growth prospects of

companies. He further says that retained earnings are a major

source of finance for growth of companies. This is because, there

is no transaction or bankruptcy cost associated with retained

profits. Thus, potential growth opportunities of a firm necessitate

a greater demand for internally generated funds.

Chasan (2012) introduce that retained earnings, otherwise

known as revenue retentions or retained surplus, refer to the

portion of a company’s profits that is kept for reinvestment into

the business or for debt payments, instead of being paid out as

dividends to shareholders. Agreeing with this submission,

Akparhuere, Eze and Unah (2015) define retained earnings as

“retention ratio” or “retained surplus”, which represent “the

percentage of net earnings not paid out as dividends but retained

by the company to be reinvested in its core business, or to pay

debt. This is recorded under shareholders’ equity on the

statement of financial position”.

Alzomaia and Al-Khadhiri (2012) examined the factors

determining dividend represented by dividends per share for

companies in the Saudi Arabia stock exchanges (TASI). In this

study a regression model with a panel data covering the period

from of 2004 to 2010 for 105 non- financial firms listed in the

stock market was used. The model investigates the impact of

Earnings per share (EPS), Previous Dividends represented by

dividends per share for last year , Growth, Debt to Equity (D/E)

ratio, Beta and Capital Size on Dividends per Share. The results

consistently support that Saudi listed non-financial firms rely on

current earnings per share and past dividend per share of the

company to set their dividend payments.

Abu (2012) constructed an empirical model for selected

commercial banks in Bangladesh which led to recommendations

that further developed the dividend payout policy for banks and

other industry listed in Dhaka and Chittagong Stock Exchange

(DSE & CSE). The results reveal that current earnings and

liquidity has potential roles for firms to determine payout policy.

In an attempt to contribute to solving the dividend puzzle.



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 7

In a related study, Afza and Mirza (2011) states that as company

becomes mature, its growth opportunities shrink. Intuitively, in

early stages, companies have to grow and a large amount of their

funds are usually committed to undertake the investment and

growth projects resulting in higher level of capital expenditures

and less availability of free cash flows. However, as companies

pass through their establishment phase, more free cash flows are

available since they have less capital expenditure and hence are

able to pay higher dividends.

Wu and Yeung (2010) document that whereas companies that

actually pay dividends already have high ratios of retained

earnings-to-total-equity (RE/TE) and high propensities to pay

(PTP) early on, companies that actually do not pay dividends

have persistently low RE/TE and low PTP even after 20 years of

growth. They proposed a growth type view, in which low growth

type can accommodate the popular distribution-retention trade-

off argument in the lifecycle expectation for high RE/TE and

PTP, but high growth type is responsible for persistently low

RE/TE and PTP. They showed that the growth type view can

explain why low RE/TE and PTP can be surprisingly long-lived.

The study points out that those typical non-payers, deliberately,

do not pay dividends even when they can, because doing so may

confuse the market.

In his own contribution, Orwel (2010) defines retained earnings

as a ratio, commonly known as retention ratio or plough back

ratio. The retention ratio is also known as the retention rate of an

organization.

The review of previous studies on determinants of stock price

was done by Ruhani and Islam 2010). The study made a special

focus on three determinants, dividend, retained earnings and

earnings per share that were indicated by several studies as co

integrated and significantly influential on stock prices. They

state that various factors have emerged as determinants of share

prices for different markets, in which dividend policy and

earnings management were found very active contributor of

share price volatility. Their study shows that dividend policy,

more specifically, information contents of dividend, information

asymmetry, signaling theory, dividend clientele effect and

dividend yield have significant impact on market price of

common stock.

The determinant of dividend policy at the Nairobi stock

exchange was gauged by Ndungu (2009) through the study of

fifty five firms for a period of five years beginning 2004 to 2008

and used multiple regression analysis. The study concluded that

company profitability, size, growth, liquidity influenced the

dividend payout ratio.

Methodology

3.1 Research Design

The study is an ex post facto (after the facts) research. Asika

(2005) opines that ex post facto research is expected to provide

a systematic and empirical solution to research problems. This is

because the research makes use of data which are in existence

and available.

3.2 Area of Study

The research is conducted in Nigeria; in the Oil and Gas industry

of the economy with more than fifty private and publicly quoted

firms as at 31st December, 2017 in both upstream and

downstream categories

3.3 Sources of Data

Time series data (2003 – 2017) was extracted from the annual

reports and accounts of the selected listed oil and gas firms. Data

on corporate reserves and financial performancevariables such

as retained earnings, depreciation provision, amortization fund,

employee benefits and return on equitywere extracted from the

annual report and accounts of the fiveselected listed firms Total

Oil Nig. Plc, Mobil Oil Plc (1991), Conoil Plc (1989), MRS Oil

Nig. Plc and Oando Plc (1991) within the Nigeria oil and gas

industry.

Historical details about the selected firms were obtained from

the Nigerian Stock Exchange Fact Book and their library

division, from 2003 to 2017. Publications of the Securities and

Exchange Commission (SEC) and their operational arm, the

Nigeria Stock Exchange, also provided information regarding

the listed firms.

Data with particular importance to review of related literature

were gathered from academic journals, libraries, websites and

internets. African Institute for Applied Economics (AIAE), the

British Council, University of Nigeria Enugu Campus Library,

National Library, Enugu State Library, Port Harcourt Library via

password access.

3.4 Population of the Study

The Nigeria oil and gas industry has a population of 14 firms

listed on the Nigeria Stock Exchange in its upstream and

downstream categories as at 31st December, 2017. However, this

number excludes the oil servicing firms and the firms under

special contract arrangements with the multinational oil



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 8

companies and the Nigerian National Petroleum Corporation

(NNPC). The study considered a representative sample from the

firms listed on Nigeria Stock Exchange. Hence, this study

evaluates the corporate reserves variables that exert varied level

of influence on the financial performance of Oil and Gas firms

in Nigeria.

3.5 Sample Size and Selection Technique

The researcher reiterates that disparity which produces spurious

results may be caused by wrong assumptions, unrepresentative

sample size, as well as insufficient observations from short time

frame. Consequently, availability of data and sufficiency of

observations are important factors of consideration in a study of

this nature. Over the years, fluctuations in the number of oil and

gas firms listed in the Nigeria Stock Exchange (NSE) was

observed by Oke and Obalade (2015) who identified Oando,

Mobil, Total, MRS Oil, Conoil and Eterna oil as firms in the

industry that regularly publish their annual reports.

3.6 Analytical Technique

The analytical technique involve the graphical representation of

the movements in the various variables used; descriptive

statistics in terms of measures of central tendency and

dispersion; unit root test of stationary of data series using

Augmented-Dickey-Fuller Test; re-confirmed by Phillips-Perron

Test; firm and industry wide regression analysis; estimated

coefficients to be used to evaluate the predictable power of each

independent variable on the dependent; coefficient of multiple

determination (R2) and adjusted coefficient of multiple

determination.

3.7 Model Specification

The model is specified in line with previous related literature in

the area of the study. Koutsoyiannis (2003) as cited in Inyiama

(2013), model specification involves the determination of the

dependent and explanatory variables which will be included in

the model, the theoretical expectations about the sign and the size

of the parameters of the function.

3.8.1 Hypothesis One

Hypothesis one states that Retain earnings does not have

significant and positive effect on depreciation provision of firms

in Nigeria oil and gas industry.

The Model is specified as:

DPt = βo + β1REt + Ԑt -

- - (5)

Where,

DP = Depreciation Provision

RE = Retain Earnings

Ԑ = Error Term

βo = Coefficient (constant) to be estimated

β1 = Parameter of the independent variable to be

estimated

t = Time

3.8.2 Hypothesis Two

Hypothesis two states that retain earnings does not have significant and positive effect on amortization fund of firms in Nigeria oil and

gas industry.


AFt = βo + β1REt + Ԑt

- - - -

(6)

Where,

AF = Amortization Fund

RE = Retained Earnings



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 9

Ԑ = Error Term



estimated

t = Time

3.8.3 Hypothesis Three

Hypothesis Three states that retain earnings does not have significant and positive effect on employee benefit of firms in Nigeria oil and

gas industry.


EBt = βo + β1REt + Ԑt - -

- - -

(7)

Where,

EB = Employee Benefit


Ԑ = Error Term



estimated

t = Time

3.8.4 Hypothesis Four

Hypothesis Four states that retain earnings does not have significant and positive effect on return on equity of firms in Nigeria oil and

gas industry.


ROEt = βo + β1REt + Ԑt - -

- - (8)

Where,

ROE = Return on Equity


Ԑ = Error Term



estimated

t = Time

3.9 Model Validity and Justification

Ordinary least squares (OLS) of the form of general multiple regression analysis is used to assess the relationships among the variables

identified in this work. For each hypothesis, a dependent variable, yit, is related to the explanatory variable through a linear equation that

was expressed in the form of;

Yit= β0 + β1xit + eit - - - - - -

- (9)



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 10

et is an error term that incorporates the cumulative effect on y, of all the factors not explicitly included in the model. If xi were increased

by one unit, y would change by an amount, β1.

The reliability of this model is dependent on the satisfaction of the assumptions that a linear relationship exists between the dependent

and the independent variable.

DATA PRESENTATION AND ANALYSIS

Data for this study is as presented in the Appendix

Data Analysis Table 1 Johansen Cointegration Analysis – Pooled Data

Date: 12/23/18 Time: 14:00

Included observations: 75

Trend assumption: Linear deterministic trend

Series: RE ROE AF DP EB

Lags interval (in first differences): 1 to 2

Unrestricted Cointegration Rank Test (Trace)

Hypothesized Trace 0.05

No. of CE(s) Eigenvalue Statistic Critical Value Prob.**

None * 0.511971 80.99062 69.81889 0.0049

At most 1 0.256020 36.51297 47.85613 0.3709

At most 2 0.143968 18.17698 29.79707 0.5530

At most 3 0.119598 8.539211 15.49471 0.4097

At most 4 0.010300 0.641890 3.841466 0.4230

Trace test indicates 1 cointegratingeqn(s) at the 0.05 level

* denotes rejection of the hypothesis at the 0.05 level

**MacKinnon-Haug-Michelis (1999) p-values

Unrestricted Cointegration Rank Test (Maximum Eigenvalue)

Hypothesized Max-Eigen 0.05

No. of CE(s) Eigenvalue Statistic Critical Value Prob.**

None * 0.511971 44.47765 33.87687 0.0019

At most 1 0.256020 18.33599 27.58434 0.4674

At most 2 0.143968 9.637766 21.13162 0.7779

At most 3 0.119598 7.897321 14.26460 0.3892

At most 4 0.010300 0.641890 3.841466 0.4230

Max-eigenvalue test indicates 1 cointegratingeqn(s) at the 0.05 level

* denotes rejection of the hypothesis at the 0.05 level

**MacKinnon-Haug-Michelis (1999) p-values



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 11

Source: Author’s Eview 8.1 Statistical software Result 2018

The trace test and max-eigen statistic shown in Table 4.2.18,

indicate that there is just one cointegrating equation at 5 per

cent significance level among the variables under study.

Consequently, it could be concluded that a long run relationship

does exist between Return on Equity, retain earnings,

amortization fund, depreciation provision and employee

benefits of the sampled oil and gas firms.

4.3 Test of Hypotheses

In the test of hypotheses of this study, the decision rule is that the

null hypothesis is accepted when the strength of the relationship

between the dependent variable and the independent

variabledoes not measure up to 50 percent. However, when it

does, the null hypothesis is rejected in favour of the alternate

hypothesis.

4.3.1 Test of Hypothesis One

Ho: Retain earnings does not have significant and positive effect

on depreciation provision of firms in Nigeria oil and gas

industry.

Table 4.3.19 Correlation Analysis For Test of Hypothesis

One

DP RE

DP 1.000000

RE 0.395417 1.000000


The strength of the relationship between depreciation provision

and retain earnings is 39.5% which falls below 50% that depicts

significance at 0.05 level as such the H0 (Nul hypothesis) was

accepted. The implication is that retain earnings does not have

significant and positive effect on depreciation provision of firms

in Nigeria oil and gas industry.Also the relationship is positive.

4.3.2Test of Hypothesis Two

Ho: Retain earnings does not have significant and positive

effect on amortization fund of firms in Nigeria oil and gas

industry.

Table 4. 2 Correlation Analysis For Test of Hypothesis Two

AF RE

AF 1.000000

RE -0.008317 1.000000


The strength of the relationship between amortization fund and

retain earnings is 0.8% which falls so much below 50% that

depicts significance at 0.05 level thus the H0( Null hypothesis)

was accepted. The implication is that retain earnings does not

have significant relationship and effect on amortization fund in

the Nigeria Oil and Gas Industry, and that the relationship is

negative.

4.3.3 Test of Hypothesis Three

Ho:Retain earnings does not have significant and positive

effect on employee benefit of firms in Nigeria oil and gas

industry.

Table 4.4 Correlation Analysis For Test of Hypothesis

Three

EB RE

EB 1.000000

RE -0.118702 1.000000


The strength of the relationship between employee benefits and


depicts significance at 0.05 level the H0 (Null hypothesis) was

accepted . The implication is that retain earnings does not have

significant relationship and effect on employee benefits in the

Nigeria Oil and Gas Industry, and the relationship is negative.

4.3,4 Test of Hypothesis Four

Ho:Retain earnings does not have significant and positive effect

on return on equity of firms in Nigeria oil and gas industry.

Table 4.3.22 Correlation Analysis for Test of Hypothesis

Three

ROE RE

ROE 1.000000

RE -0.235577 1.000000


The strength of the relationship between Return on Equity and


depicts significance at 0.05 level thereby the H0 (Null

hypothesis) was accepted. The implication is that Return on

Equity does not have significant relationship and effect on



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 12

retains earnings in the Nigeria Oil and Gas Industry, and the

relationship is negative.

Summary of Findings

1. Retained earnings does not have significant and

positive effect on depreciation provision of firms in Nigeria oil

and gas industry.The analysis depict that the strength of the

relationship between depreciation provision and retain earnings

is poor. The implication is that retain earnings does not have high

effect on depreciation provision of firms in Nigeria oil and gas

industry.

2. The retain earnings does not have significant and positive

effect on amortization fund of firmsin Nigeria oil and gas

industry. The findings shows that the strength of the relationship

between amortization fund and retain earnings is low. The

implication is that retain earnings does not have high effect on

amortization fund in the Nigeria Oil and Gas Industry.

3. The study findings portray that the strength of the relationship

between employee benefits and retain earnings is weak. The

implication is that retain earnings does not have high effect on

employee benefits in the Nigeria Oil and Gas Industry.

5. States thatretain earnings does not have significant and

positive effect on return on equity of firms in Nigeria oil and gas

industry.

The analysis shows the strength of the relationship between

Return on Equity and retain earnings is low. The implication is

that Return on Equity does not have high effect on retains

earnings in the Nigeria Oil and Gas Industry.

5.2 Conclusion

In line with the Signaling Theory, managers seek to use retain

earnings policies to signal to the shareholders about the financial

performance of their firms. However, as firms develop and age

through its’ life cycle, they tend to alter the some policies

depending on the financial demands of a particular stage. By

implication, firms at their early stages of growth are likely to

retain more earnings for expansion, thereby paying lesser

dividend than older firms. More matured and older firms are

likely to pay more dividends as growth opportunities would have

dwindled.

Depreciation provision is affected positively by retain earnings

in Nigeria Oil and Gas industry, while other variables utilized

were affected negatively by retain earnings. The extent of

influence of retained earnings on return on equity is both

negative and insignificant. This is the same scenario in Mobil

Plc, Conoil Plc. and Oando Plc. when the firms were taken in

isolation. The outcome of the analysis is in line with the a priori

expectations of the researcher and in accordance with the

theoretical framework of the study. Retained earnings is

expected to associate negatively for the variables under study, as

retained earnings are the residue after other fundamental

payments.

5.3 Recommendations

The researcher recommends that:

1. Firms should strive to improve on their retain earnings

so as to enhance depreciation provision in a consistent basis.

2. Management of the firms should also improve retain

earnings so as to enhance amortization of fund by allocating cost

prudently to intangible asset over a period of time.

3. Firms should endeavour to retain more earnings to

enhance employees’ benefit which will in turn stimulate

workers’ performance and firms’ profit.

4. Return On Equity should be enhanced and vigorously

pursued to retain investors and improve their well being. Other

sources of earnings should be exploited to increase profitability.

References

Abubakar, J. and Umar, A. (2013). Crude Oil Prices and Foreign

Exchange Rates: Evidence of Cointegration and

Causality from Nigeria. www.eajournals.org.

Abu, S.T. (2012). Determinants of dividend payout policy:

Evidence from Bangladesh, International Journal of

Economic Practices and Theories. 2(3), 18 – 34.

Afza, T and Mirza, H.H. (2011). “Do Mature Companies Pay

More Dividends? Evidence from Pakistani Stock

Market”, Mediterranean Journal of Social Sciences

2(2), 152 – 160.

Al-Malkawi, H. (2008). “Factors Influencing Corporate

Dividend Decision: Evidence from Jordanian Panel

Data”, International Journal Of Business, 13(2), 32 -

48.

Anthony, J. H. and Ramesh, K.(1992). Association between

Accounting Performance Measures and Stock Prices:



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 13

A Test of the Life Cycle Hypothesis. Journal of

Accounting and Economics, 15, 203-27.

Arif1, A. and Akbar, F. (2013). Determinants of Dividend

Policy: AIndustryal Analysis from Pakistan,

International Journal of Business and Behavioral

Sciences 3(9), 16- 33.

Arowoshegbe, A. and Idialu, J. (2013). “Capital Structure And

Profitability Of Quoted Companies in Nigeria”

International Journal of Business and Social Research

(IJBSR), 3(3), 19 – 37.

Ahmed, H., and Javid, A. Y. (2009). Determinants of Dividend

Policy in Pakistan‟, International Research Journal of

Finance and Economics, 8(29), 110- 125.

Al-Kuwari, D 2009. Determinants of the Dividend Policy in

Emerging Stock Exchanges: The Case of GCC

Countries‟, Global Economy & Finance Journal, 2(2),

38-63.

AL- Shubiri, N. (2011). Determinants of Changes Dividend

Behavior Policy: Evidence from the

Amman Stock Exchange, Journal of Psychology and

Business, 2(4), 1 – 15.

Baker, H. K. (2009). Dividends and Dividend Policy.London:

Wiley.

Balaputhiran, S. (2014).Firm performance and earnings per

share: A study oflisted banks in Sri

Lanka. Merit Research Journal of Accounting, Auditing,

Economics and Finance 2(1), 008- 011. Available

online http://www.meritresearchjournals.

Black, E.L. (1998). Life – Cycle Impacts on the Incremental

Relevance of Earnings and

Cash Flow Measures, Journal of Financial Statement

Analysis Fall, 6(2), 40-56.

Black, A., Wright, P. and Davies, J. (2001). In search of

shareholder value .2nd Edition. London: Pearson.

Blake, C (1998) “Improving Organizational Performance”. A

Watson Wyatt Presentation on Business Driven

Incentives, June 1998. http//www.Watswatt/BDriven.

Bulan, L., Subramanian, N. and Tanlu, L. (2007).“On the Timing

of Dividend Initiations.”

Financial Management 36(4), 31-65.

Bulan, L, Subramanian, N. (2010) “The Firm Life Cycle Theory

of Dividends”. http/./www.firmcycle/div/sub

Bradley, M., Jarell, G. and Kim, E.H. (1984). “On the Existence

of an Optimal Capital Structure: Theory and

Evidence”.The Journal of Finance, 39, 857-878

Chasan, E. (2012). Mid-Size Firms Tap Retained Earnings to

Fund Growth. The Wall Street Journal, 16 (3), 23 – 39.

Chavis, L.W., Klapper, L., Love, I. (2012). The Impact of the

Financial Crisis on Young Firm Financing. Policy

Research Working Paper 5322.The World Bank.

Collins, M.C, Saxena, A.K, and Wansley, J.W. (1996). The role

of insiders and dividend policy: a comparison of

regulated and unregulated firms. Finance Strategic Dec

1996; 9:1-9.

Daniel, N., Denis, D. and Naveen, L. (2007). Do Firms Manage

Earnings to Meet Dividend

Thresholds? Journal of Accounting and Economics

www.elsevier.com/locate/jae 45 (2), 2–26

DeAngelo, H., DeAngelo, L. and Stulz, R. M. (2006). Dividend

policy and the earned/contributed capital mix: a test of

the life-cycle theory. Journal of Financial Economics,

81, 227-254.

http://www.meritresearchjournals/



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 14

Dickey, D. A., Fuller, W. A. (1979). Distribution of the

Estimators for Autoregressive Time Series with a Unit

Root. Journal of the American Statistical Association,

74, 427-431.

Doepke, M. (2004). Show Me the Money: Retained Earnings and

the Real Effects of Monetary Shocks,

http://sites.uclouvain.be/econ/DP/REL/2005011.pdf

Dominguez, K., (2011). International Reserves and the Global

Financial Crisis, Nber Working

Paper Series, National Bureau of Economic Research

Working Paper 17362

http://www.nber.org/papers/w17362

Donaldson, C., (1961). Corporate debt capacity; a study of

corporate debt policy and the determination of

corporate debt capacity. http://www.worldcat.org/

Harvard University

Dutta, S and Reichelstein, S. (2001). Controlling Investment

Decisions: Depreciation and Capital Charges, Review

of Accounting Studies, 4, 235-258.

Engle, R. F and Granger, C. W. J.(1987). Co-Integration and

Error-Correction: Representation, Estimation and

Testing, Econometrica. 55, 251-276.

Granger; C.W.J (1969), Some recent developments in a concept

of causality, Journal of Econometrics, 39, 199-211.

Iga (2008).Depreciation and Related Issues June, Financial

Sustainability Program, Information Paper 17, LGA

‘Depreciation and Related Issues’Information Paper,

http://www.lga.sa.gov.au/webdata/resources/files/LGA

-37989

Investopedia. (2014). Excess Reserves,

http://www.investopedia.com/terms/e/excess_reserves.

asp

Johansen, S. (1991), Estimation and Hypothesis Testing of

Cointegrating Vectors in Gaussian Vector

Autoregressive Models, Econometrica59, 1551-80.

Khan, H. S.,(2009). Determinants of Share Price Movements in

Bangladesh: Dividends and Retained Earnings, Thesis

for the degree of MSc. in Business Administration,

School of Management, Blekinge Institute of

Technology, Spring. http://www.sea-

mist.se/fou/cuppsats.nsf/all/70Version.pdf

Kim, B., and Suh, J. (2010).Retained Earnings and Capital

Structure, http://media.csmfo.org/wp-

content/uploads/2010.

Mikkelson, Wayne, and Megan Partch, 2003, Do persistent large

cash reserves hinder performance? Journal of Financial

and Quantitative Analysis 38, (2), 275-294.

Modigliani, F., and Miller, M., (1958), “The Cost of Capital,

Corporation Finance and the theory of investment”, The

American Economic Review, 48, (3), PP 261-297.

Myers, S. and N. Majluf, 1984. Corporate financing and

investment decisions when firms have information that

investors do not have. Journal of Financial Economics

13, 187-221.

Nwude, C. (2007). Valuation and Pricing of Equity Securities in

an Emerging Stock Market:

Evidence from Nigerian Banking Sector (July 27, 2007).

Available at SSRN:

http://ssrn.com/abstract=1649439 or

http://dx.doi.org/10.2139/ssrn.1649439

http://www.nber.org/papers/w17362

http://www.sea-/

http://www.sea-/

http://ssrn.com/abstract=1649439

http://dx.doi.org/10.2139/ssrn.1649439



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 15

Onuorah, A., and Ezeji, E.C., (2013). A Comparative Analysis

Of The Impact Of Corporate

Taxation On Company’s Reserve and Dividend Policy In

Nigeria: 2000-2011, Developing Country study,

International Knowledge Sharing Platform, 3(1).

Thirumalaisamy, R.(2013). Firm Growth and Retained Earnings

Behavior – A Study on Indian

Firms, European Journal of Business and Management, 5(27).

Thorntorn, G. (2010) Maintaining sufficient reserves to protect

your not-for-profit organization,

www.elsevier.com/locate/jae

Onojah A, L. and Unegbu, A.(2013) Review of Accounting

Gimmicks Called Depreciation,

Open Journal of Accounting, 2013, 2, 39-44.

Segal, U and Spivak, A.(1985). Firm Size and Optimal Growth

Rates, UCLA Working Paper

380, http://www.econ.ucla.edu/workingpapers/wp380.pdf.

Shayne, k. (2013). Sizing your Reserves: How much is Enough,

Government Finance Officers

Association, 107th GFOA Annual Conference, Bridges to

financial sustainability,

http://media.csmfo.org/wp-content/uploads/2013/06/fund-

reserve-gfoa-national.pdf

Tsuji, C. (2012). Does EVA beat earnings and cash flow in

Japan? Applied FinanDeniescial

Economics, 16, 1199-1216.

Wu, X., and Yeung, C. K. (2010). A Growth Type Explanation

for Persistence in Retained

Earnings and Propensity to Pay Dividends, Working paper, City

University of Hong

Kong.

APPENDIX:

One: Data for Analysis – Total Oil Nig. Plc

YEAR RE(Nm) AF(Nm) DP(Nm) EB(Nm) ROE(Nm)

2003 62.7 7 0.82 0.1 1.21

2004 66.7 9 0.99 0.1 1.01

2005 74.2 9 1.1 5.1 0.91

2006 87.4 9.5 0.89 5.2 1.12

2007 43.6 7.4 0.99 4.1 0.88

http://www.iiste.org/Journals/index.php/DCS/issue/view/498

http://www.econ.ucla.edu/workingpapers/wp380.pdf

http://media.csmfo.org/wp-content/uploads/2013/06/fund-reserve-gfoa-national.pdf

http://media.csmfo.org/wp-content/uploads/2013/06/fund-reserve-gfoa-national.pdf



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 16

2008 51.3 9.5 0.99 4.7 0.99

2009 60.4 12.93 0.99 2.4 1

2010 56.8 11.68 0.99 7.7 1

2011 60.8 8 0.49 3.4 2

2012 38 9 0.8 4.7 1.24

2013 41.3 11 0.79 8 1.25

2014 33.3 11 0.7 6.4 1.28

2015 33.2 11 0.7 7.4 1.41

2016 24.9 11 0.92 6.9 0.85

2017 62.78 17 0.39 5.9 2.56

Source: Computed from Annual Reports and Accounts, 2018 – Total Oil Nig. Plc



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 17

Table 4.1.2: Data for Analysis – Mobil Nig. Plc


2003 69 2.46 100 0.04 1

2004 212 6.06 100 0.05 1

2005 199 6.5 89 4.33 1.13

2006 73 6.65 94 1.24 1.07

2007 61 7.14 100 4.93 0.78

2008 50 4.7 100 28.1 0.66

2009 61 5 81 2.01 1.52

2010 68 7 74 8.4 1.89

2011 100 9.6 75 7.78 1.83

2012 91 5 42 4.21 1.42

2013 44 5 59 3.98 1.92

2014 36 6 63 4.85 1.93

2015 47 6.6 38 4.2 2.95

2016 32 7.2 53.29 3.14 2.04

2017 38.1 8 35.38 2.96 3.14

Source: Computed from Annual Reports and Accounts, 2018 – Total Oil Nig. Plc



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 18

Table 4.1.3: Data for Analysis – Conoil Nig. Plc


2003 12.3 1.19 92.96 0.01 1.08

2004 30 3.5 99.71 0.02 1

2005 29.1 2 62.69 1.6 1.59

2006 31 2.5 66.13 2.9 1.51

2007 24.87 2.75 67.9 3.8 1.47

2008 21.64 2.75 73.53 3.1 1.36

2009 15.31 1 38.17 1.4 2.62

2010 17.11 1.5 45.04 4.5 2.22

2011 18.28 2 60 5.2 2.01

2012 17.97 2.5 57.87 8.9 1.73

2013 4.57 1 97.09 4.4 1.03

2014 17.02 4 90.49 8.1 1.11

2015 5.18 1 83.33 3.1 1.2

2016 13.03 3 90 12.8 3.33

2017 15.37 3.1 75.79 9.19 1.36

Source: Computed from Annual Reports and Accounts, 2018 – Conoil Nig. Plc



ISSN (5282 -0053);

p –ISSN (4011 – 230X)




pg. 19

Table 4.1.4: Data for Analysis – MRS Oil Nig. Plc


2003 65.09 2.99 0.74 0.2 1.74

2004 22.44 2.40 0.71 0.4 1.42

2005 39.83 3.06 0.92 0.7 1.08

2006 0.33 4.14 0.99 0.65 1

2007 0.38 5.12 0.99 0.6 1.6

2008 0.48 7.5 0.97 3.1 1

2009 17.2 3.27 0.81 2.4 1.23

2010 0.35 2.68 0.79 2.1 1.25

2011 0.09 1.26 0.17 1.9 5.01

2012 0.05 1.25 0.31 2.5 3.26

2013 0.01 0.7 0.86 2.8 1.17

2014 0.03 0.23 0.09 0.4 10.7

2015 0.04 0.75 0.25 1.6 3.92

2016 4.46 1.1 0.299 2.3 4.19

2017 6.16 0.88 0.165 2.5 4.85

Source: Computed from Annual Reports and Accounts, 2018 – MRS Oil Nig. Plc

Table 4.1.5: Data for Analysis – Oando Oil Nig. Plc


2003 0.91 1.4 70 0.54 0.92

2004 13.33 2 83 0.06 1.22

2005 4.49 2 82 5.3 0.78

2006 5.04 3.12 75.47 8.7 0.96

2007 5.87 2.5 60.83 8.1 2.15

2008 4.83 3.62 48.2 6.8 2.39

2009 19.12 6 65.08 23.7 1.15

2010 15.1 3 26.5 6.1 3.72

2011 9.31 3 36.1 5.5 5.29

2012 2.6 3 36.19 16.9 1.05

2013 7.62 2.39 18.68 18.2 3.36

2014 2.22 0.3 13.43 1.6 1.8

2015 33.47 2.25 66.57 0 1.5

2016 7.95 2.25 94 0.11 1.1

2017 9.48 2.48 96 0.16 1.32

Source: Computed from Annual Reports and Accounts, 2018 – Oando Oil Nig. Plc

Documents

EFFECT OF CORPORATE RESERVE ON THE FINANCIAL …cird.online/ESSAJ/wp-content/uploads/2019/08/Kdl-19-996-CIRD-ESS… · Double Blind Peer and Editorial Review International Referred