This research investigated the impact of corporate profitability on the stock price volatility of listed firms in Nigeria and integrated market capitalization as a control variable. Return on Assets, Return on Equity and Earnings Per Share were used as profitability measures. Ex post facto research design was used, with the sample being derived from a data from 80 firms drawn from the ten sectors in Nigerian Exchange Group for a specified period. The secondary data were pooled to take care of missing observation and robust estimation. The empirical result demonstrated that Return on Assets, Return on Equity and Earnings Per Share have no statistically significant impact on share price volatility. The results imply that none of the profitability measures have strong influences on stock price movements in Nigerian market, which may be attributed to the inefficiencies in the Nigerian market, investors are not reliable on accounting information and that fundamental trade behavior are not significant in the market. Market capitalization has a positive and significant impact on stock price. This indicates that firm size has significant impacts on stock price, which affects the stability of stock prices and investors’ behavior, as large sized firms have better stock market profile, more trades, more activities in the stock market and a higher institutional investment presence compared to small firms thus more stable stocks. In conclusion, size is more significant than profitability ratios in impacting the stock price in Nigeria. Increased transparency, enhancing corporate visibility and further research by including more market based variables would have enhanced understanding of the price volatility of emerging market companies.
Keywords: Corporate profitability, share price volatility, Return on Assets, Return on Equity, Earnings Per Share, Market capitalization.
