ABSTRACT

The study investigated effect of financial ratios on shareholders’ investment decisions of listed firms in Nigeria.The study used ex post facto research design and extracted secondary data from annual reports of selected manufacturing firms listed in the Nigeria stock Exchange within the period 2014 to 2018.To ascertain the relationship of the variables it employed earnings per share and price earnings ratio as collective proxies for financial ratio while percentage change in mumber of shareholders was adopted as proxy for shareholders investment decision of firms. The study adopted panel least squares method of data estimation based on the cross section and time series data employed to determine whether financial ratios affect shareholders investment decisions of firms in Nigeria. It was established that earnings per share and price earnings ratio has significant effect on percentage change in number of shareholders of firms in Nigeria. The study therefore concludes that financial ratios has significant effect on shareholders investment decisions of listed firms in Nigeria. It therefore recommends that the management offirms should endeavour to create balance on their market value through efficient and transparent practices and management should continue to provide detailed report of earnings per share and implement it through bonus issues.