Does Financial Statement Information Still Matter?

Abstract

Financial statements have been used as a medium for communicating corporate performance to the various stakeholders of business organizations. As such, they are expected to have some qualitative characteristics to be able to facilitate this communicative role and provide useful information for investment decision making. To this end, this study was carried out to examine the accounting information relevance on market performance of companies in Nigeria. The study adopted the panel data design and data were obtained from annual reports of companies for the year 2017. The population of the study consisted of all listed industrial and consumer goods companies in Nigeria.  A sample size of 37 companies in the industrial and consumer goods sector was randomly selected and utilized for the study. The multivariate regression analysis was adopted as data analytical method. The study using the results of the multivariate regression shows that earning per share; dividends per share and book value per share all have a significant positive relationship with share prices. The study also finds that cash flow from operating activities has a positive but weak correlation with share prices while leverage has a negative and non- significant relationship with share prices.  The study concludes that accounting information disclosure in Nigeria has not lost its relevance as investors still use them in making economic and business decisions.

Keywords: Value Relevance, Accounting Information, Financial Statements, Share Prices, Earnings.

DOI: 10.7176/RJFA/10-13-03

Publication date:July 31^st 2019