Key Features:

No of Chapters: 5
No of Pages: 120
Methodology: ANOVA

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Introduction:

1.1 Background to the Study
Value relevance of accounting information has been a primary paradigm in financial accounting research. Research on value relevance of accounting information, its historical development and its comparison among different countries has increased since the 1990s. There has been concerns as to whether financial statements are losing their value relevance due to the shift from an industrialized economy to a high-tech, service oriented economy(Dontoh., Radhakrishman., & Ronen, 2012),and as to whether cross-country differences in disclosure and measurement practices cause differences in the quality of accounting information.
However, value relevant, harmonious accounting standards alone are not sufficient to improve the financial reporting environment. Accounting standards should be of good quality, and be acceptable and enforceable. Value relevance is one of the basic attributes of accounting quality (Francis, LaFond, Olsson &Schipper 2004; & Beisland, 2009). The value relevance was weak in the periods of political crisis caused by military dictatorship (1992-1998) and global economic crisis (2005-2009), it was high in the other periods. Value relevance is defined as the ability of accounting numbers contained in the financial statements to explain the stock market measures (Beisland, 2009). Value relevance is being defined as the ability of information disclosed by financial statements to capture and summarize firm value.

Accounting information is any data or information obtains from the accounting system of a firm whether contained in a financial statement, a special report, or verbal statement (William, 1968). However, for the purpose of this research, accounting information refers to written information contained in a complete or partial financial report –balance sheet or profit and loss account or fund flow statement. Accounting information must possess two qualitative features: relevance and reliability; to be acceptable and useful to investors. Thus, accounting information, derivable from the financial statements, will not be useful if either of the two prominent characteristics totally fades out. Barth, Beaver, and Landsman. (2001) stated that studying the relevance and reliability of accounting information separately is difficult because these criteria are conflicting parameters and the amount of them are not determined in theoretical concepts of financial reporting. Studies on value relevance of accounting information are motivated by the fact that listed companies use financial statements as one of the major media of communication with their equity shareholders and public at large (Vishnani,&Shah, 2008).

For instance, in Nigeria, Companies and Allied Matters Act (CAMA), (1990) and the subsequent amendments require. The Directors of all companies listed on the Nigerian Stock Exchange to prepare and publish annually the financial statements. Beyond this, the Nigerian Stock Exchange mandates all companies listed on first tier market to submit quarterly, semi-annual and annual statements of their accounts to the Stock Exchange. Companies on second tier market are to submit their statements of accounts annually to Stock Exchange (Osaze, 2007). This study investigates whether these various items of financial statements are value relevant in the Nigerian Stock Exchange or not.

1.2 Statement of the Problem
According to the previous studies many researchers used relationship between Market price per share as the dependent variable and a set of independent variables. Ball and Brown in 1968, highlighted the relationship between stock prices and the accounting information disclosed in the financial statements. Ball, and Brown. (1968) explained that the value of a firm can be expressed as a linear function of book value, earnings and other relevant information. There has also been considerable volatility (and uncertainty) in the past few years in mature and emerging financial markets worldwide (Alexander, 1999). It is also well established in the accounting literature that stock price volatility tends to increase around accounting information events (beaver, 1968). The value and the quality of accounting information are determined by how well it meets the needs of users (Khanagha, 2011). Negah, (2008) asserts that studies on the value relevance of accounting numbers in emerging markets are limited. He further claims that the scanty literature replicates works done in mature markets and that closer examination of these works reveals that they face both epistemological and empirical challenges.