Financial Accounting Numbers and the Emerging Nigerian Stock Market

Using the sample of companies quoted on the Nigeria Stock Exchange, we investigate the extent to which financial accmmting nwnbers are reflectingin their stock price; indicating their value relevance. Accormting data is deemed value relevant if it is significantly connected with the stock price. The methods used for measuring information contents of various accmmting nwnbers were Random Effects Model (REM), Fixed Effects Model (FEM) and Ordinary Least Squared (OLS). The findings reveal that there is a major correlation between financial accmmting mnnbers and prices of the firms' stock compiled on the Nigerian Stock Exchange (NSE). Dividends, earnings and net book value are the most commonly used accormting information for making investment decisions in Nigeria. Dividends are more value relevant than earnings and net book value. The study therefore recommends that the quality of earnings of firms be enhanced as manipulated earnings (which have dividends as sub-sets) have large impact on prices of share. The study also has as its recommendation that all quoted companies on the Nigerian Stock Exchange publish Simplified Investor's Swnmary Accmmts (SISA) emphasizing on the accmmting information most widely used along the required obligatory thorough financial statements to fit Nigerian individuality.