Financial Reporting Quality and Share Price Movement of Selected Listed Firms in Nigeria
Keywords:
Share Price, Financial Reporting Quality, Earnings Per Share, Dividend Per Share, Return on Equity, Return on Assets
Abstract
This study aims to ascertain the extent to which financial reporting quality affects the share price movement of selected consumer goods manufacturing firms listed on the Nigeria Exchange Group. The specific research objectives encompass examining the effects of earnings per share, dividend per share, return on equity, and return on assets on the market price per share of these firms. The chosen research design is an ex post facto research design on a population consisting of nineteen (19) consumer goods manufacturing firms listed on the Nigerian Exchange Group. A purposive sampling technique was applied to select sixteen (16) firms. Secondary data used were sourced from the annual reports of the sampled firms from 2012 to 2021. Fixed effect regression model was estimated in order to test the hypotheses of the study. The analysis reveals that earnings per share have a significant positive impact on share price movement, dividend per share demonstrates a positive but non-significant effect, return on assets exhibits a significant negative impact, and return on equity shows a positive but non-significant effect. In conclusion, prioritizing sustained profitability, prudent capital allocation, transparent reporting, and effective investor engagement can collectively contribute to favorable share price movement and enhance overall stakeholder value. The study recommends that consumer goods manufacturing firms in Nigeria should engage in transparent communication about earnings trends and drivers in order to enhance investor understanding of the firm's financial health, fostering greater confidence and potentially driving positive share price movement.
References
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19. Ghofar, A. & Saraswati, E. (2008). Problems in financial reporting: the analysis of quality of disclosure and the measurement system of the traditional accounting. Retrieved on 17/02/2023 from http://www.indonesiauniversity.edu.in/
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22. Ijeoma, N. B. (2015). Value relevance of accounting information on share prices of listed firms. Social and Basic Sciences Research Review, 3(10), 328-344.
23. Islam, M.R., Khan, T.R., Choudhury, T.T.,& Adnan, A.S. (2014).How earning per share affect share price and firm value. European Journal of Business and Management, 6(17).
24. Izedonmi, F. O., Obgaisi S. A., & Oshdin E. (2017). Audit committee characteristics and financial reporting timelines. Uniosun International Journal of Business Administration (UIJBA), 1 (1) PP.28-39.
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27. Jonas, G. & Blanchet, J. (2000). Assessing quality of financial reporting. Accounting Horizons, 14 (3), 353-363.
28. Kachchhy, U.S., Swadia,B.U., &Tiwari, S.C. (2014). Accounting information and stock price reaction of listed companies— empirical evidence from all listed companies from nse in oil and gas sector. Interna/tional Journal of Research & Development in Technology and Management Science, 21.
29. Kehinde, S.J. (2012). Share price change: The efficient market hypothesis and the white noise hypothesis dichotomy. International Journal of Humanities and Social Science, 2(22), 18-31.
30. Khan, K.I. (2012).Effect of dividends on stock prices– A case of chemical and pharmaceutical industry of Pakistan. Management, 2(5).
31. Mahmoud, I. & Adebisi, J. F. (2017). Performance characteristics and accrual metrics in Nigerian conglomerates companies. Uniosun International Journal of Business Administration (UIJBA). 1 (1), 163-173.
32. Mgbame, C. O., & Ikhatua, O. J. (2013). Accounting information and stock volatility in the Nigerian capital markets: a GARCH analysis approach. International Review of Management and Business Research, 2.
33. Mines, L. & Wahlen, J. (2006). The nature of accounting information reliability: Inferences from archival and experimental research. Accounting Horizons, 20 (4), 399-425.
34. Nworie, G. O., Moedu, V. O. & Onyali, C. I. (2023). Contribution of Current Assets Management to the Financial Performance of Listed Consumer Goods Firms in Nigeria. International Journal of Trend in Scientific Research and Development, 7(1), 77-87, URL: www.ijtsrd.com/papers/ijtsrd52600.pdf
35. Nworie, G.O. & Mba, C.J. (2022). Modelling Financial Performance of Food and Beverages Companies Listed on Nigerian Exchange Group: The Firm Characteristics Effect. Journal of Global Accounting, 8(3), 37 - 52.
36. Nzekwu, C. (2009). Financial reporting. SEC Quarterly Journal, 2 (1), 6-10.
37. Olowolaju, P. S., & Ogunsan, J. O. (2016). Value relevance of accounting information in the determination of shares prices of quoted Nigerian Deposit Money Banks. International Journal of Economics, Commerce and Management, 4(10), 128-147.
38. Olugbenga, A. A., &Atanda, O. A. (2014). The relationship between financial accounting information and market values of quoted firms in Nigeria. Global Journal of Contemporary Research in Accounting, Auditing and Business Ethics (GJCRA),1 (1), 22 -39.
39. Olumide, A, Tanko, M. & Nyor, T. (2016). Firm structural characteristics and financial reporting quality of listed deposit money banks in Nigeria. Journal of international business research, 9(1), 1913 – 9004
40. Oshodin, E., & Mgbame, C. O. (2014). The comparative study of value relevance of financial information in the Nigeria banking and petroleum sectors. Journal of Business Studies Quarterly,6(1), 42-54.
41. Oyerinde, D. T. (2006).Value relevance of accounting information in emerging stock market in Nigeria. Proceedings of the 10th annual international conference. International Academy of African Business and Development (IAABD),Uganda.
42. Pandey, I. M. (2015). Financial management. 10th ed.. New Delhi: Vikas Publishing House PVT Ltd.
43. Paul, A.A., and Juliana, M. (2015). Relationship between accounting information and stock market returns on the Nigerian Stock Exchange. Management and Administrative Sciences Review, 4(1).
44. Peavler, R. (2017). How to calculate market price per share. https://www.thebalance.com/what-is-the-market-price-pershare- 393220. Retrieved 19/02/2023
45. Perera, R.A.A.S. & Thrikawala, S.S. (2010). An Empirical Study of the Relevance of Accounting Information on Investor’s Decisions. In: Proceedings of the 1st International Conference on Business and Information, University of Kelaniya.
46. Seetharaman, A. & Raj, J.R. (2011). An empirical study on the impact of earnings per share on stock prices of a listed bank in Malaysia.The International Journal of Applied Economics and Finance, 5(3).
47. Shehzad, K., & Ismail, A. (2014). Value relevance of Accounting Information and its Impact on Stock Prices: Case Study of Listed Banks at Karachi Stock Exchange. Journal of Economic Info, 3(1), 40-48, 2014
48. Siyanbola, K. & Adedeji, A. (2014). A study of the barriers of implementation of accounting information system: Case of listed companies in Tehran Stock Exchange, Journal of Economics and Behavioral Studies, 7(1), 234 – 250.
49. Umar, M.S., & Musa, T.B.(2013). Stock prices and firm earning per share in Nigeria. Journal of Research in National Development, 11(2).
50. Uniamikogbo, E., Ezennwa, E. O., & Bennee, E. (2018). Influence of accounting information on stock price volatility in Nigeria. Accounting and Taxation Review, 2(4), 113-124.
51. Uwuigbe,U., Olowe,O.,& Godswill,A. (2012). An Assessment of the Determinants of Share Price in Nigeria. ACTA Universities Danubius; 8(6), 56-78.
52. Van Beest, F., Braam, G. & Boelens, S. (2009). Quality of financial reporting: measuring qualitative characteristics. Obtained on 16/02/2023 at http://www.ru.nl/nice/ workingpapers
53. Vijitha, P. & Imalathasan, B. (2014) “Value relevance of published financial statements with special emphasis on impact of cash flow reporting”. International Research Journal of Finance and Economics, 17(1), 1450-2887.
54. Vishnani S., Shah B.K. (2008). Value relevance of published financial statements- With special Emphasis on Impact of cash flow reporting, International Research Journal of Finance and Economics, Vol. 17, pp 84-90.
55. Wang, J., Fu, G., & Luo, C. (2013). Accounting information and stock price reaction of listed companies—empirical evidence from 60 listed companies in Shanghai Stock Exchange. Journal of Business & Management, 2(2), 11-21.
2. Aggreh, M., Nworie, G. O., & Abiahu, M. F. C. (2022). Debt structure and financial performance: evidence from listed construction firms in Nigeria. Journal of Banking, 10(2), 145-195. https://www.researchgate.net/publication/368246184
3. AL- Shubiri, F. N. (2010). Analysis the determinants of market stock price movements: an empiric al study of Jordanian Commercial Banks. International Journal of Business and Management, 5(10), 137-147.
4. Amiri, A., Ravanpaknodezh, H., and Jelodar, A. (2015). A survey of the relationship between stock price volatility and a variety of companies on the Stock Exchange (case study: the companies listed on Tehran Stock Exchange).GMP Review, 16, 21-34.
5. Angahar, P. A., & Malizu, J. (2015). The relationship between accounting information and stock market returns on the Nigerian stock exchange. Management and Administrative Sciences Review, 4(1), 76-86.
6. Babalola. A. Y. (2012). Significance of accounting information on corporate value of firms in Nigeria. Research Journal in Organization Psychology and Education Studies, 1(2), 105-113.
7. Barth, M.E., Beaver, W.H., & Landsman, W.R.( 2001), The relevance of the value relevance literature for financial accounting standard setting: another view. Journal of Accounting and Economice, 31, 77-104.
8. Beisland, L.A. (2009). A review of the value relevance literature.The Open Business Journal, 2.
9. Belkaoui, A. R. (2002). Accounting theory (4th edition). United Kingdom: T. J. International.
10. Bello, A. (2009). Financial information quality and ination accounting disclosure in Nigerian cement industry. PhD. Dissertation submitted to the Postgraduate School of Ahmadu Bello University, Zaria – Nigeria.
11. Benston, G. J. (2007). Contemporary issues in financial reporting: a user-oriented approach. The International Journal of Accounting, (2), 23-32.
12. Chang, H.L., Yahn-Shir C., Chi-Wei S., and Ya-Wen C. 2008. The relationship between stock price and eps: Evidence based on Taiwan panel data. Economics Bulletin, 3(30), 1- 12.
13. Dang, N. H., Tran, M. D., & Nguyen, T. L. A. (2018). Investigation of the impact of financial information on stock prices: The case of Vietnam. Academy of Accounting and Financial Studies Journal, 22(2), 1-12.
14. Ejuvbekpokpo, S.A. & Okoro, G.E. (2014). Determinants of stock price movement: evidence from the Nigerian stock exchange. Journal of Economics and Sustainable Development 5(3), 1-7.
15. Eriabie, S., & Egbide, B. (2016). Accounting Information and Share Prices in the Food and Beverage, and Conglomerate Sub-sector of the Nigerian Stock Exchange. Journal of Accounting, Finance and Auditing Finance,2(3), 292-306.
16. Ewereoke, V. N. (2018). Value relevance of accounting information in a transitional economy: The case of Nigeria stock market. Global Journal of Applied, Management and Social Sciences, 15, 124-139.
17. Fama, E. F. (1991). Efficient capital markets: II. Journal of Finance, 46(5), 1575–1617.
18. Francis, J.,& Schipper, K. (1999) Have financial statements lost their relevance?Journal of Accounting Research, 37, 319—352.
19. Ghofar, A. & Saraswati, E. (2008). Problems in financial reporting: the analysis of quality of disclosure and the measurement system of the traditional accounting. Retrieved on 17/02/2023 from http://www.indonesiauniversity.edu.in/
20. Glezakos, M., Mylonakis, J., & Kafouros, C. (2012). The impact of accounting information on stock prices: evidence from the Athens stock exchange. International Journal of Economics and Finance, 4(2), 56–68.
21. Idekwelim, P. C. (2014). Teach yourself IFRS. Lagos state, Piccas Global Concept.
22. Ijeoma, N. B. (2015). Value relevance of accounting information on share prices of listed firms. Social and Basic Sciences Research Review, 3(10), 328-344.
23. Islam, M.R., Khan, T.R., Choudhury, T.T.,& Adnan, A.S. (2014).How earning per share affect share price and firm value. European Journal of Business and Management, 6(17).
24. Izedonmi, F. O., Obgaisi S. A., & Oshdin E. (2017). Audit committee characteristics and financial reporting timelines. Uniosun International Journal of Business Administration (UIJBA), 1 (1) PP.28-39.
25. Jeroh, E. (2016). Effect of IFRS adoption on the determinants of share prices in quoted service firms in Nigeria. Sahel Analyst: Journal of Management Science 14(4): 1–12.
26. Jianwei, L., &Chunjiao, (2007).Testing value relevance of accounting earnings in emerging markets.Journal of International Accounting Research, 6(2).
27. Jonas, G. & Blanchet, J. (2000). Assessing quality of financial reporting. Accounting Horizons, 14 (3), 353-363.
28. Kachchhy, U.S., Swadia,B.U., &Tiwari, S.C. (2014). Accounting information and stock price reaction of listed companies— empirical evidence from all listed companies from nse in oil and gas sector. Interna/tional Journal of Research & Development in Technology and Management Science, 21.
29. Kehinde, S.J. (2012). Share price change: The efficient market hypothesis and the white noise hypothesis dichotomy. International Journal of Humanities and Social Science, 2(22), 18-31.
30. Khan, K.I. (2012).Effect of dividends on stock prices– A case of chemical and pharmaceutical industry of Pakistan. Management, 2(5).
31. Mahmoud, I. & Adebisi, J. F. (2017). Performance characteristics and accrual metrics in Nigerian conglomerates companies. Uniosun International Journal of Business Administration (UIJBA). 1 (1), 163-173.
32. Mgbame, C. O., & Ikhatua, O. J. (2013). Accounting information and stock volatility in the Nigerian capital markets: a GARCH analysis approach. International Review of Management and Business Research, 2.
33. Mines, L. & Wahlen, J. (2006). The nature of accounting information reliability: Inferences from archival and experimental research. Accounting Horizons, 20 (4), 399-425.
34. Nworie, G. O., Moedu, V. O. & Onyali, C. I. (2023). Contribution of Current Assets Management to the Financial Performance of Listed Consumer Goods Firms in Nigeria. International Journal of Trend in Scientific Research and Development, 7(1), 77-87, URL: www.ijtsrd.com/papers/ijtsrd52600.pdf
35. Nworie, G.O. & Mba, C.J. (2022). Modelling Financial Performance of Food and Beverages Companies Listed on Nigerian Exchange Group: The Firm Characteristics Effect. Journal of Global Accounting, 8(3), 37 - 52.
36. Nzekwu, C. (2009). Financial reporting. SEC Quarterly Journal, 2 (1), 6-10.
37. Olowolaju, P. S., & Ogunsan, J. O. (2016). Value relevance of accounting information in the determination of shares prices of quoted Nigerian Deposit Money Banks. International Journal of Economics, Commerce and Management, 4(10), 128-147.
38. Olugbenga, A. A., &Atanda, O. A. (2014). The relationship between financial accounting information and market values of quoted firms in Nigeria. Global Journal of Contemporary Research in Accounting, Auditing and Business Ethics (GJCRA),1 (1), 22 -39.
39. Olumide, A, Tanko, M. & Nyor, T. (2016). Firm structural characteristics and financial reporting quality of listed deposit money banks in Nigeria. Journal of international business research, 9(1), 1913 – 9004
40. Oshodin, E., & Mgbame, C. O. (2014). The comparative study of value relevance of financial information in the Nigeria banking and petroleum sectors. Journal of Business Studies Quarterly,6(1), 42-54.
41. Oyerinde, D. T. (2006).Value relevance of accounting information in emerging stock market in Nigeria. Proceedings of the 10th annual international conference. International Academy of African Business and Development (IAABD),Uganda.
42. Pandey, I. M. (2015). Financial management. 10th ed.. New Delhi: Vikas Publishing House PVT Ltd.
43. Paul, A.A., and Juliana, M. (2015). Relationship between accounting information and stock market returns on the Nigerian Stock Exchange. Management and Administrative Sciences Review, 4(1).
44. Peavler, R. (2017). How to calculate market price per share. https://www.thebalance.com/what-is-the-market-price-pershare- 393220. Retrieved 19/02/2023
45. Perera, R.A.A.S. & Thrikawala, S.S. (2010). An Empirical Study of the Relevance of Accounting Information on Investor’s Decisions. In: Proceedings of the 1st International Conference on Business and Information, University of Kelaniya.
46. Seetharaman, A. & Raj, J.R. (2011). An empirical study on the impact of earnings per share on stock prices of a listed bank in Malaysia.The International Journal of Applied Economics and Finance, 5(3).
47. Shehzad, K., & Ismail, A. (2014). Value relevance of Accounting Information and its Impact on Stock Prices: Case Study of Listed Banks at Karachi Stock Exchange. Journal of Economic Info, 3(1), 40-48, 2014
48. Siyanbola, K. & Adedeji, A. (2014). A study of the barriers of implementation of accounting information system: Case of listed companies in Tehran Stock Exchange, Journal of Economics and Behavioral Studies, 7(1), 234 – 250.
49. Umar, M.S., & Musa, T.B.(2013). Stock prices and firm earning per share in Nigeria. Journal of Research in National Development, 11(2).
50. Uniamikogbo, E., Ezennwa, E. O., & Bennee, E. (2018). Influence of accounting information on stock price volatility in Nigeria. Accounting and Taxation Review, 2(4), 113-124.
51. Uwuigbe,U., Olowe,O.,& Godswill,A. (2012). An Assessment of the Determinants of Share Price in Nigeria. ACTA Universities Danubius; 8(6), 56-78.
52. Van Beest, F., Braam, G. & Boelens, S. (2009). Quality of financial reporting: measuring qualitative characteristics. Obtained on 16/02/2023 at http://www.ru.nl/nice/ workingpapers
53. Vijitha, P. & Imalathasan, B. (2014) “Value relevance of published financial statements with special emphasis on impact of cash flow reporting”. International Research Journal of Finance and Economics, 17(1), 1450-2887.
54. Vishnani S., Shah B.K. (2008). Value relevance of published financial statements- With special Emphasis on Impact of cash flow reporting, International Research Journal of Finance and Economics, Vol. 17, pp 84-90.
55. Wang, J., Fu, G., & Luo, C. (2013). Accounting information and stock price reaction of listed companies—empirical evidence from 60 listed companies in Shanghai Stock Exchange. Journal of Business & Management, 2(2), 11-21.
Published
2023-08-23
How to Cite
Joseph Amedu, & Tochukwu G. Orji-Okafor. (2023). Financial Reporting Quality and Share Price Movement of Selected Listed Firms in Nigeria. Central Asian Journal of Innovations on Tourism Management and Finance, 4(8), 35-53. https://doi.org/10.51699/cajitmf.v4i8.579
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