Value Relevance of Accounting Information on Share Prices of Listed Firms

This study empirically examined the value relevance of accounting in Nigeria in order to ascertain whether certain accounting variables affect share prices on the Nigerian capital market. The population of the study comprises of 200 firms but due to non-availability of data of all listed firms, a sample of 120 listed firms was used during the period 2001-2013. Data of share, book value per share, per share and return on equity were sourced from the Nigerian Stock Exchange fact book and the Ordinary Least Square estimation technique was used in analyzing the data obtained from the Nigerian Stock Exchange fact book with the aid of Statistical Package for Social Sciences. The study indicated a significant relationship between earnings, book value, returns on equity and share prices of listed firms on the Nigerian Stock Exchange. The implication of the findings is that certain variables of accounting play a significant role in share price in the capital market, thus accounting is value-relevant in Nigeria. Based on the findings, it was recommended amongst others that listed firms on the Nigerian Stock Exchange should prepare Simplified Investors' Summary Accounts (SISA) with emphasis on the most widely used accounting along with the mandatory detailed financial statements to suit Nigerian peculiarities. In addition, the National accounting standard setters and preparers of accounting should gear effort towards improving the quality of earnings information in financial statements. This could be done by properly defining and reducing management so as to avert room for creative accounting where managers engage in the practice of manipulative earnings.