Decision-usefulness Of Financial Statements And Non-financial Information Of Quoted Firms In Nigeria

Investors need information that enables them evaluate share prices and make decision on whether to buy, hold, or sell investments. However, lack of relevant and reliable information is one of the many problems facing investors in making investment decisions in developing economies. Therefore, this study examined the usefulness of financial statements and non-financial information of quoted firms in Nigeria from 1996 to 2015 for decision. The objectives were to: (i) examine the decision-usefulness of statement of comprehensive income; (ii) determine the decision-usefulness of statement of financial position; (iii) evaluate the decision-usefulness of statement of cash flows; (iv) investigate the decision-usefulness of non-financial information; (v) assess the impact of cap imposition on the decision-usefulness of financial statements; and (vi) evaluate the impact of accounting conservatism on the decision-usefulness of financial statements.rnrnThe study employed quantitative research design. The population of the study consists of eighty six (86) firms which shares were quoted from 1996 to 2015. A cross sectional sample of forty six (46) firms were selected using Yamane formulae over twenty (20) years. Panel data were collected from secondary sources. The data were sourced from financial statements of selected quoted firms and the Nigerian Stock Exchange Factbooks. Based on Hausman test, panel regressions were estimated using the fixed effect technique. rnThe findings of the study were that:rn(i) statement of comprehensive income (earnings per share β1 = 0.5929, p<0.01; accrual earnings β2 = 0.0007, p<0.05; dividend per share β3 = 7.7516, p<0.01; research & development β4 = 0.0245, p<0.05; human capital β5 = 0.0009, p<0.05; earnings growth β6 = 0.3865, p<0.1; lagged earnings β7 = 2.8471, p<0.10) was decision useful;rn(ii) statement of financial position (total assets β8 = -0.00002, p < 0.05; total liabilities β9 = 3.2000, p < 0.10; book value β10 = 0.9197, p < 0.01; lagged book value β11 = -0.1799, p < 0.01) was decision useful;rn(iii) statement of cash flows (cash flows from operations β12 = 0.00075, p < 0.10; lagged cash flow operation β13 = 0.00085, p < 0.05) was decision useful;rn(iv) non-financial information(β14 = 0.6248, p >0.05) was not decision useful;rn(v) cap imposition (β15= -37.210,p <0.05) had inverse relationship with the usefulness of financial statements for decision; andrn(vi) accounting conservatism (β16 = -7.643,p < 0.01) had negative effect on the usefulness of financial statements for decision.rnThe study concluded that investment decision should be based on the strength of financial information. The study recommended that investors should fully use the information from financial statements for their investment decisions but exercise caution over the use of non-financial information.

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