IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 10 NO. 5 2025
DOI: 10.56201/ijefm.v10.no5.2025.pg16.30

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Finance Cost and shareholders wealth maximization of Listed Oil and Gas Companies in Nigeria

Ogbolu, Lucky Mmamefune, OsavweOkoroyibo, Elizabeth

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Abstract

This study explored the interplay between finance cost and shareholders wealth maximization of listed oil and gas companies in Nigeria. It therefore focused on the positivist paradigm and adopted the ex post facto method of research design. Four listed oil and gas companies were randomly selected as samples for investigations. The annual financial statements of these companies were the source of the secondary data collected for the study. Applying the Pearson correlation model as the tool of analysis on the data gathered, the investigation showed that finance cost does not significantly impact on price earnings ratio which indicated a negative correlation of -0.018 with a significant value of 0.912. The investigation further revealed that finance cost does not significantly impact EPS with a significant value of 0.614 and correlation value of 0.082, the correlation is positive but very weak. The study concluded that finance cost does not significantly impact on price earnings ratio and earnings per share of listed oil and gas companies in Nigeria. Thus, the research recommended that the management should ensure optimal gearing that would enhance earnings in order to boost companies P/E ratio without overshooting debt servicing obligations; and that borrowed funds should be channeled to areas that will boost profits in order to enhance EPS which is a key performance indicator.

keywords:

Finance Cost, Shareholders Wealth Maximization, Price Earnings Ratio, Earnings Per

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APPENDIX
Data Presentation
a. Finance Cost
Year
Conoil Plc
Ardova plc
Mrs Plc
Eterna Plc
N'000
N'000
N'000
N'000
2021
757,540
1,534,583
376,333
1,180,555
2020
704,573
1,408,180
1,089,611
1,001,618
2019
1,113,323
4,825,394
617,674
1,685,849
2018
1,508,064
3,101,580
218,116
867,859
2017
2,137,170
2,174,254
210,263
534,823
2016
1,764,897
2,622,410
635,771
3,531,058
2015
3,757,508
3,091,295
1,880,203
531,238
2014
2,307,767
3,102,519
1,427,577
386,042
2013
2,251,826
1,446,586
784,508
743,449
2012
4,166,857
1,782,534
1,358,196
511,650
Source: Companies’ Financial statements
b. Price Earnings Ratio
Year
Conoil Plc
Ardova plc
Mrs Plc
Eterna Plc
2021
0.11
0.42
0.45
0.60
2020
0.24
0.31
-0.07
0.64
2019
0.18
0.17
-0.09
-12.5
2018
0.19
0.04
-0.12
0.57
2017
0.22
0.17
0.09
0.31
2016
0.25
0.52
0.09
0.43
2015
0.15
0.11
0.14
0.52
2014
0.42
0.21
0.17
0.52
2013
0.11
0.12
0.20
0.94
2012
0.49
0.82
0.62
0.68
Source: Author’s Computation based on Companies’ Financial statements
c. Earnings per Share
Year
Conoil Plc
Ardova plc
Mrs Plc
Eterna Plc
NGN
NGN
NGN
NGN
2021
4.44
1.18
1.12
0.83
2020
2.08
1.60
-7.43
0.78
2019
2.84
3.00
-5.59
-0.04
2018
2.59
0.48
-4.15
0.87
2017
2.27
2.89
5.45
1.59
2016
2.00
0.97
5.77
1.17
2015
3.33
4.39
3.68
0.97
2014
1.20
2.42
2.94
0.97
2013
4.42
4.25
2.50
0.53
2012
7.14
0.61
0.18
0.73
Source: Companies’ Financial statements
Results of Data Analyses
a. Analysis of the Significant Impact of Finance Cost on Price Earnings Ratio
Correlations
Finance Cost
Price Earnings
Finance Cost
Pearson Correlation
1
-.018*
Sig. (2-tailed)
.912
N
40
40
Price Earnings
Pearson Correlation
-.018*
1
Sig. (2-tailed)
.912
N
40
40
*. Correlation is significant at the 0.05 level (2-tailed).
b. Analysis of the Significant Impact of Finance Cost on Earnings per Share
Correlations
Finance Cost
EPS
Finance Cost
Pearson C

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