Stock Returns of ‘Sin’ and ‘Non- Sin’ Companies in Nigeria: A Comparative Empirical Assessment

Abstract

This study comparatively analyzed the stock returns of sin and non- sin companies in Nigeria. The population of the study was heterogeneous consisting of all the quoted firms regarded as sin and the manufacturing ones at 31st December, 2016 which fall into the categories of non-sin companies. A sample of twenty-six (26) non-sin firms (manufacturing) and twenty-five(25) sin companies including banks was selected for the period 2010 and 2016. Summary statistics such as descriptive and correlation Statistics, Capital Asset pricing models (CAPM) and Panel estimation methods were used to analyze the data. The findings indicate that sin companies have higher stock return (excess returns), earnings per share but a lower dividend payment as against the comparables. Premised on these empirical findings, the study recommends that financial analysts should always encourage investors to invest more in selected companies regarded as sin based on their products and services than the non-sin companies due to better higher stock returns. Some of the companies considered as sin in terms of their production or services rendering need to be viewed differently by investors in that some of them in terms of exponential thinking are really not sin companies and as such investors have to exercise caution so as not be misled.