Comparative Study of Value Relevance of Financial Information in the Oil and Gas and Manufacturing Sectors in Nigeria

Abstract

This paper conducted a comparative study on the value relevance of accounting information in the Oil and Gas and manufacturing sector using five quoted companies which were randomly selected from each of these sectors. Data were collected on the Market Price per Share, Earning per Share and Book Value of Equity for the period 2014 to 2018 from the annual financial reports of the selected companies. We hypothesized that Value relevance in the oil sector do not have more significant effect on the earnings per share in the manufacturing sector and, also that Value relevance in the oil sector do not have more significant effect on the market price per share  in the industrial sector. We regress book value of equity on both market price per share and earnings per share on the two sectors under consideration using simple linear regression techniques. The regression results revealed that accounting information of the companies in the industrial sector is more relevant compared to the financial information disclosed by companies in the Oil and Gas sector. The study recommends that the regulators of the market should carry out yearly Cross-sectional studies to ascertain the trend and include this comparison requirement as one of the yardsticks of measuring performance.

Keywords: value relevance, earnings per share, book value of equity

DOI: 10.7176/RJFA/11-12-03

Publication date:June 30th 2020