How Corporate Diversification affects Excess Value and Excess Profitability: A study of Deposit Money Banks in Nigeria.

Abstract

This paper examines the relationship between excess value and excess profitability using deposit money banks in Nigeria as focal points of the study. The study relied on historic accounting data generated from financial (annual) reports and accounts of sampled banks between the ten-year period covered by the study. Borrowing from previous studies, appropriate regression and correlation equations were formulated to measure the relationship between excess value and excess profitability of Nigerian banks. The regression and correlation analyses revealed that the correlation is positive and significantly different from zero. This implies that there is significant relationship between excess value and excess profitability of deposit money banks in Nigeria. Thus the study provides evidence that there is a significant relationship between excess value and excess profitability of both diversified and standalone banks.

Keywords: Diversification; excess value; excess profitability; stand alone banks.