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AN EVALUATION OF SHARE PRICE DETERMINATION AND CORPORATE FIRM CHARACTERISTICS

CHAPTER ONE

INTRODUCTION

Background to the Study

The immediate operation launched by the Niger Delta militia group called Niger Delta Avengers and Youths' nervousness in the region has affected crude oil exploitation, exploration and prospecting over the years but the recent launch operation zero economies carried out by the avengers bombing crude oil pipelines and attacking oil installations became a national challenge as it led to decrease in oil prices and lure Nigeria into economic recession, which then cause Organization of the Petroleum Exporting Countries (OPEC) to reduce output and also causing problems in the global market. The Nigerian Oil and Gas Industry Content Development Act (the "Act"), which was recently signed into law, is the culmination of decades of efforts by the government and petroleum industry stakeholders to ensure that the industry provides local value and maximum benefits to Nigerians. Since the discovery of oil in Nigeria over fifty years ago, the petroleum industry has operated as an "enclave" economy, contributing little to the Nigerian economy. Previous efforts to put the local content policy into action have included the establishment of various research, development, training, education, and support funds; provisions in the Petroleum Act requiring petroleum operators to employ and train Nigerians; provisions in various contractual arrangements with International Oil Companies ("IOCs") requiring technology transfer, local content utilisation, recruitment, and training of Nigerian personnel; and (Solabomi & Babajide, 2017).

Chemweno (2017), posit that firm characteristic consists of structure, capital and market-related structures. The structures related are firm size, ownership and firm age. These market-associated structures include environmental uncertainties, industry type and the immediate marketing environment while the capital-related structures include liquidity and capital intensity (Alseaed, 2017).

Lawal (2018) explained organizational performance as the firms' ability to create acceptable outcomes. There is no universally accepted definition of organisational performance as it relates to a firm's survival, profit, return on investment, sales growth, employee count, and reputation. As a result, it is critical to find cost-effective ways to improve standards while also reducing constraints on innovation, product refinement, and existing efforts to strengthen a firm's capacity to reduce costs and increase overall profitability (Uchida, 2017).

The performance of a firm is very vital to its existence, survival and fighting sound competition as compared to leading global market leaders. Performance is significant because it helps to differentiate a brand and enhances shareholders' wealth maximization and also contributes to increasing the market value of specific firms. It could also lead to industry growth which potentially leads to economic growth in a country. Assessing what determines performance in the oil and gas sector is crucial since Nigeria's economy has been mono in recent years and the petroleum segment ACTA UNIVERSITATIS DANUBIUS Vol 18, No 5, 2022 200 is a focal point. Financial performance has tremendously received attention from academic scholars in the diverse field of business, strategic management and even engineering (Aribaba, Ahmodu, Oladele, Yusuff & Olaleye, 2019). This is a primary concern for firms and business practitioners in all organizational learning and enterprises since financial performance has dire implications for an organization's safety, survival and profit-making. High financial performance will indicate management's efficiency, effectiveness and having the knowledge and wisdom of productivity (Naser, & Mokhtar, 2019).

The gap identified ascends the interest of researchers to evaluate the relationship between firm characteristics and the financial performance of listed oil and gas companies in Nigeria. The study, however, differed from previous studies on publicly traded oil and gas companies in that it used quantitative data rather than qualitative data, as most previous studies did. The variables are chosen and their definitions measurement thus described as Return on Assets (ROE) were computed as profit before tax. Firm Size (FSE) was measured through the evaluation of the volatility of the firms’ capabilities and activities, which can be viewed from various prospects. Financial Leverage (LEV) was defined as a company's equity and debt used to fund its assets. The ownership impetration (ONP) variable described how many different parties own the share of a firm. Firm Age (FAE) recognises the numeral years of integration of the firm. An evaluation of share price determination and corporate firm characteristics in Nigeria provides a comprehensive understanding of the intricate relationship between stock valuation and the inherent attributes of companies operating within 

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