The Practical Influence of Earnings per Share on Individual Investment Decision

Abstract

The returns on an investment is a critical information or factor considered by many investors in their investment decisions as the surplus are either in the money and or capital markets of which both cases the investor expects a fair amount of returns at a level of risk for their investments. The issue of the practical effect of earnings per share on investment decisions of investors needs considerations. Using a descriptive analytical approach research adopted a research questionnaire for the literature and administered, cleaned and had a total of usable respondents of 536 for the study. The study used Microsoft Excel and Statistical
Program for Social Science (SPSS) to present the data collected for meaningful analysis in correlations and simple regression analysis. The reliability of the data (Cronbach’s alpha) was 90.34%. The study revealed that 59.24% (r2 =0.593257) of the investment decisions made in relations to wealth maximization and 52.9% (r2 = 0.529051) of the investment decision taken by the consideration of the accounting information could be explained by the investors level of understanding of earnings per share. The need for improved education and strategic presentation of financial statements highlighting profitability and liquidity ratios was
essential to attracting investments.