FINANCIAL REPORTING QUALITY AND SHARE VALUES OF QUOTED NON- FINANCIAL FIRMS IN NIGERIA
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Date
2019
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Abstract
The study examined the level of compliance with financial reporting standards of quoted non-
financial firms in Nigeria and examined the extent of financial reporting quality among the firms.
It also determined the factors influencing financial reporting quality of quoted non-financial
firms and investigated the impact of financial reporting quality on share values of the quoted
non-financial firms in Nigeria. These were with a view to determining the effect of financial
reporting quality on the firms’ value of quoted non-financial firms between 2002 and 2017.
The study employed secondary data. The population of this study was 176 quoted non-financial
firms listed on the Nigeria Stock Exchange. Fifty firms were purposively selected based on the
availability of complete financial information for the sampled period. Data on cashflow accrual
ratio, statements of financial position accrual ratio as proxies of financial reporting quality,
firms’ size, auditors’ type, share values, board size, leverage, audit committee size, age and
firms’ liquidity were sourced from the audited annual financial report of the firms and factbook
of Nigeria Stock Exchange. Data collected were analysed using percentages fixed effect model,
random effect model and pooled OLS method.
The results showed that the compliance of firms had been increasing over the years with Income
Tax (IAS 12) having the highest level of compliance of 100% among the six sampled standards.
Also, results on the extent of financial reporting quality established that the level of
manipulation of financial statement had been reducing every year and it had been reduced to 0%
in both years 2016 and 2017 respectively. Furthermore, results revealed that both leverage and
size of the firm (t = -0.3412, p > 0.05; t = 0.1325, p > 0.05) respectively, had no significant
impact on the financial reporting quality of quoted non-financial firms in Nigeria. Finally, result showed that the financial reporting quality had significant positive effect on the share value of
firms (t = 2.1385, p < 0.05).
The study concluded that financial reporting quality has a positive impact on the market value of
quoted non-financial firms in Nigeria.