Corporate Governance and Value Relevance of Accounting Information:Evidence from Nigeria

Abstract

Purpose-This study evaluates the connection between Corporate Governance and Value relevance of accounting information for firms listed on the Nigerian Stock Exchange. It sought to ascertain the effectiveness of corporate governance by demonstrating a link between corporate governance and firm valuation.

Design/Methodological/Approach-The paper employed the Ohlson valuation model and variants of the model, using adjusted R² as measures of value relevance.  The paper used board, audit committee and external audit variables as indicators of corporate governance. The sample consisted of forty-five(45) listed firms over the period 2008 to 2015.

Findings- results shows that accounting information is value relevant on the Nigerian market, however presently  corporate governance practices does not lead to perceptible increase in the value relevance of accounting information.

Research limitation/implication-this paper provides evidence that corporate governance has not improved the quality of accounting information in Nigeria, a result which contradicts the evidence from other countries. The Nigerian context implies that indicators of corporate governance quality from empirical literature do not address the problem of corporate governance in Nigeria.

Originality/value-the paper determines the effect of corporate governance on value relevance of accounting information, using the relationship of accounting information with share price as indicator of quality of accounting information. The implication therefore is that efficient capital allocation will improve if the quality of corporate governance is improved

Keywords: Value Relevance, Corporate Governance, Accounting information, Nigeria