VALUE-RELEVANCE OF ACCOUNTING INFORMATION AND SHARE PRICES OF LISTED NON-FINANCIAL FIRMS IN NIGERIA A MODERATING ROLE OF ECONOMIC GROWTH

Abstract

Accounting fundamentals has been described as one of the key factors considered by investors when taking investment decisions. This study is aimed at examining the influential role of real Gross Domestic Product (RGDP) on the relationship between accounting information and share price. The study extend the Ohlson model to incorporate RGDP by examining the moderating role of RGDP on the relationship between accounting fundamentals and share price of listed manufacturing firms in NGX. The study employed ex-post facto research design with 95 listed non financial firms on the floor of NGX for the period 2012 to 2021. The data for the study was sourced from NGX fact-book and the Central bank statistical Bulletin. The methods used for testing the information content of various accounting information was the robust Ordinary Least Squared (OLS). The study reveals that Earning Per Share and Net Book Value Per Share and Price Earnings Ratio are positively and significantly related to Share Price. On the other hand, ROE is insignificantly related to share price of listed non financial firms in NGX. The findings from the study indicate that RGDP has significant moderating role on the relationship between Net book value per share and share prices where as RGPD has negative influence between EPS and PE and share price but positive and insignificant relationship between ROE and Share price . On the basis of these findings, it was concluded accounting information has impact on share price and that RGDP also influences the relationship between accounting information and share price of listed non-financial firms in NGX. By implication, the reliability of accounting fundamentals of listed Non Financial firms for investment decision could be enhanced in the NGX when the changing prices of shares are identified, captured, presented and equally published in the financial information of such firms by the preparers of accounting information.  The study recommends that non financial firms should ensure that the published captures both macro and micro economic factors that will influence share price for investors when taking investment decision.