VALUE RELEVANCE OF ACCOUNTING INFORMATION IN A TRANSITIONAL ECONOMY: THE CASE OF NIGERIA STOCK MARKET

This study assessed the value relevance of accounting information of firms quoted on Nigeria Stock Exchange. Three specific objectives were formulated which dealt with determining the extent to which the accounting variables affect share prices of companies on Nigeria Stock Exchange. From the specific objectives, three hypotheses were also formulated. To test the hypotheses, a sample of 68 companies were selected, using multiphase sampling techniques from the population of 213 companies listed on Nigeria stock market in 2001. This study adopted the Edward – Ben Ohlson 1995 model transformed into an ordinary least square approach to test the research hypotheses. The analyses of the test shows that hypotheses one was rejected hence the acceptance of the alternate hypotheses which invariably means that earning per share is value relevant to equity share investment in Nigeria stock exchange market. Hypotheses two and three were accepted indicating that there are no significant relationship between book value per share, dividend per share and prices of companies listed on Nigeria stock exchange market. We therefore  recommend among others that companies listed on Nigeria stock exchange market should prepare  simplified  investors summary account (SISA) with emphases on earning per share , dividend per share and cash flow in addition to the detailed financial statement, and investors having complementary information sources other than published accounting reports to become more   informational efficient.