Accounting Information and Stock Prices of Quoted Manufacturing Firms: Multi-variant Panel Data Evidence from Nigeria

Abstract

This study the relationship between accounting information and the stock prices of quoted firms in Nigeria. The general objective was to examine if accounting information have any effect on market value of quoted firms. Cross sectional data was sourced from financial statement of 23 manufacturing firm from 2008-2017. Stock price of the firms was modeled as a function of assets turnover rate, book value per share and debt equity ratio. Ordinary least square method of cointgration, unit root and granger causality test was used to determine the extent to which human resource cost affect quality of financial report. After cross examination of the validity of the pooled effect, fixed effect and the random effect, the study accepts the fixed effect model. The study found that the independent variables explained 78 percent variation on the market value of the quoted firms. The beta coefficient of the variables indicates debt equity ratio and assets turnover rate have positive effect on the stock prices of the quoted firms while book value per share have negative effect on the stock prices of the manufacturing firms. From the regression summary, the study concludes that there is significant relationship between accounting information and prices of the quoted firms. The study recommends that management of the manufacturing firms should formulate policies that will increase book value per share and internal and external factors that affect negatively the book value per share of the firms should be discouraged.

Impact of earnings per share and dividend per share on firm value

“…This study found that the stock prices of food industry companies on the Indonesian Stock Exchange for 2014-2017 were simultaneously influenced by EPS and DPS. These findings are consistent with the results of several studies such as (Ahmed, 2018;Arslan & Zaman, 2014;Farrukh et al, 2017) in Pakistan (Innocent, Uchechukwu, & Ikechukwu, 2015) and (Adediran & Alade, 2013) in Nigeria, (Lin et al, 2011) in Shanghai, (Warrad, 2017) in Jordan, (Majanga, 2015) in Malawi, and (Nagendra, Kumar & Venoor, 2018) in Bombay that found EPS and DPS concurrently. This shows that information about EPS and DPS can help investors make wise choices about investing their funds in the capital market (Nagendra, Kumar & Venoor, 2018;Sharif et al, 2015).…”

“…These results are consistent with (Ahmed, 2018;Idawati & Wahyudi, 2015;Innocent et al, 2020;Islam et al, 2014;Majanga, 2015;Robbetze et al, 2017;Solomon et al, 2016;Wang, 2013) who discovered that EPS is a determinant affecting stock prices in stock exchange-listed companies. However, it is distinct and inconsistent with those who found no effect of EPS on stock prices (Khairani, 2016;Warrad, 2017).…”

“…This information can be obtained from the company's periodic financial reports (Arsal, Intan, Abd & Bashir, 2016). For decision-making stakeholders, financial statements are important for (Innocent, Ibanichuka, & Micah, 2020). This is undoubtedly an issue for businesses to determine what factors or variables can be used in the capital market as indicators affecting share prices.…”

Accounting Information Disclosure and Dividend Payout of Listed Pharmaceutical Firm in Nigeria

“…The term of relevance value in accounting information is derived from the theory of clean surplus which states that the value of the company is reflected in the accounting information contained in the financial statements (Feltham & Ohlson, 1995;Ohlson, 1995). Okoro and Micah (2020) studied the relationship between accounting information and the stock prices of quoted firms in Nigeria. The general objective was to examine if accounting information have any effect on market value of quoted firms.…”

“…The model of accounting analysis in this study will therefore follow the conventional method, and this, is in reference to the variables of interest in the model above. Okoro and Micah (2020) who studied the accounting information and the stock prices of quoted firms in Nigeria, and the model as SP= (ATR, BVPS, DER)- -----------------------------------------------------i where, SP = Stock price ATR = Assets turnover rate BVPS = Book value per share. DER = Debt equity ratio.…”