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Asian Finance & Banking Review; Vol. 4, No. 1; 2020 
ISSN 2576-1161    E-ISSN 2576-1188 

Published by Centre for Research on Islamic Banking & Finance and Business, USA 

 

     1 
 

 

Accounting Information and Stock Prices of Quoted Manufacturing Firms: 
Multi-variant Panel Data Evidence from Nigeria 

 
 

Okoro Innocent 
Department of Accounting 

Faculty of Management Sciences 
University of Port Harcourt, Rivers State, Nigeria 

E-mail: innocentokoro35@yahoo.com 
 
 

E.A.L. Ibanichuka 
Department of Accounting 

Faculty of Management Sciences 
University of Port Harcourt, Rivers State, Nigeria 

 
 

L.C. Micah 
Department of Accounting 

Faculty of Management Sciences 
University of Port Harcourt, Rivers State, Nigeria 

 
 

Abstract 
This study the relationship between accounting information and the stock prices of quoted firms in Nigeria. The general 
objective was to examine if accounting information have any effect on market value of quoted firms.  Cross sectional data was 
sourced from financial statement of 23 manufacturing firm from 2008-2017. Stock price of the firms was modeled as a function 
of assets turnover rate, book value per share and debt equity ratio. Ordinary least square method of cointgration, unit root and 
granger causality test was used to determine the extent to which human resource cost affect quality of financial report. After 
cross examination of the validity of the pooled effect, fixed effect and the random effect, the study accepts the fixed effect 
model.  The study found that the independent variables explained 78 percent variation on the market value of the quoted firms. 
The beta coefficient of the variables indicates debt equity ratio and  assets turnover rate have positive effect on the stock prices  
of the quoted firms while book value per share have negative effect on the stock prices  of the manufacturing firms. From the 
regression summary, the study concludes that there is significant relationship between accounting information and prices of the 
quoted firms. The study recommends that management of the manufacturing firms should formulate policies that will increase 
book value per share and internal and external factors that affect negatively the book value per share of the firms should be 
discouraged. 

Keywords: Accounting Information, Market Value, Quoted Manufacturing Firms, Panel Data, Nigeria.  
 
 
1. Introduction 
Prior to the deregulation of stock market in Nigeria, stock prices of newly issued and existing stocks were regulated by the 
regulatory agent of the market,  the Nigerian Securities and Exchange Commission,  without reference to internal factors such as 
financial information  that can affect stock prices of  listed firms. Stock prices in the Nigerian stock Exchange moves up and 
down in response to news and information expected about the particular stock in the market. The news and information cause 
buyers and sellers of common stocks to take buying and selling decisions which generate market activities that affect market 
value (Aflbi and Dada, 2014). Stock price constitute the value of a firm (Pandey, 2005). 

The effect of stock volatility arising from the role of accounting information disclosure in mitigating uncertainty, 
accounting disclosures may reduce the magnitude of the impact of news about a firm’s performance, which would reduce stock 
price volatility (Lang and Lundholm 1993; Bushee and Noe 2000). Retrospectively, the market microstructure theory also 
suggest that by increasing the amount of public information, disclosure is likely to reduce information asymmetries in the market 
that result in pronounced price changes in response to changes in demand for the stock (Diamond and Verrecchia 1991). 



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Disclosure reduces heterogeneity of beliefs about the true value of the firm. It may thus reduce both the volume traded and the 
volatility of the stock price.   

An increase in disclosure implies that more information is released, which in and of itself might move the price and 
increase volatility (Ross 1989). An increase in the disclosure of information relies on sophisticated investors to interpret and put 
the disclosed information into context. Indeed specific disclosure requirements could provide the markets with more data that 
might be misconstrued by analysts. More disclosure might thus inject more market volatility (Institute of International Finance 
2003; Shleifer and Vishny 1997). 

In Nigeria, Section 296 of Companies and Allied Matter Act 1990 (as amended) mandates all public limited 
companies to make public the financial status of the firm within a specific accounting period. The role of management as agent 
to the shareholders gives it obligation to be accountable to the owners. Management is responsible for the preparation of 
financial statement based on the accounting records of the organization which reflects the nature and operations of the entity 
and expected to be in conformity with Generally Accepted Accounting Principle (GAAP).  
The need for financial reporting and disclosure arises from information asymmetry and conflict of interest between managers 
and shareholders (Healy and Palepa, 2006).According to International Accounting Standard Board (IASB), (2008), high quality 
financial reporting is critical to investors and other stakeholders in making investment, credit and similar decision. The need for 
adequate fair, reliable, relevant, timely and unbiased financial information is irrefutable in a free enterprise economy.  

Information is related to various theories such as stakeholder theory (Choi, 1973), agency theory (Piot, 2005, and 
Stulz 2005), legitimacy theory (Deegan, 2002 and Tsang, 1998) and political economy theory (Choi, 1973). Information 
dissemination is an important and effective tool of coordinating all those groups to bring them together. Beuselinck (2005) 
clearly evidences quoting other relevant theories linked to economic functions that financial reporting quality is prime to well-
functioning of the economy. The development of accounting theory originated in the United States as a result of the corporate 
scandals in the early 1900s and later was influenced by the establishment of professional accounting bodies in the United State 
and the United Kingdom that published documents relating to accounting principles and standards for financial statements 
(Schroeder, et al., 2011). Mandatory disclosure of reported financial statements is an important source of information with 
significant economic implications for investors, creditors, firms and other users. The usefulness of financial information for 
investor decision-making process has been the focus of many researchers since the 1960s. 

Accounting information, such as that conveyed in publicly disclosed accounting reports, is also critical to the analysis 
of temporal liquidity positions of equity markets. Disclosure of accounting information arguably reduces information 
asymmetries amongst investors (Amihud and Mendelson, 1986). As argued by Black (2000) and Ball (2001) timely financial 
accounting disclosure system that is a prerequisite to the very existence of efficient stock markets in which stock prices to a 
considerable extent reflects all public information and incorporates private information as well as communicate the information 
set to managers, current and potential investors. Accounting information plays a very important role in our society for making 
efficient business decisions. 

 However according to the international accounting standard board an accounting standard board general purpose 
financial reports are not designed to show the value of a reporting entity; but they provide information to help existing and 
potential investors, lenders, and other creditors to estimate the value of the reporting entity (FASB, 2010). Investors and other 
users of financial reports rely on models derived from finance theories to make investment decisions. There are numerous 
theories relating to the decision-making process of equity investors, this includes the capital asset pricing model and fundamental 
analysis models, among others.  

The asymmetric information theory financial markets are especially characterized by informational differences between 
buyers and sellers. Private information and modeling it to financial economics  created another perspective on  financial 
information  as determinants of  market value  most especially in the developing financial markets  like Nigeria whose degree of 
market imperfection is close to unitary. These theories proclaim that insiders, such as management, are assumed to possess 
superior, private information about the firm’s characteristics concerning income stream as well as investment opportunities. 
Therefore this study examined the effect of accounting information on the market value of quoted manufacturing firms in 
Nigeria. 

 
 

2. Literature Review 
2.1 Accounting Information 
Accounting information can be seen as the outcome of accounting systems that measure and routinely disclose audited, 
quantitative data concerning the financial position and performance of an enterprise. Audited balance sheets, income statements, 
and cash-flow statements, along with supporting disclosures, form the foundation of the financial accounting reports to investors 
and indeed a wide range of accounting information users. Financial statements have the ability to perform a number of functions. 
They basically provide financial aid to managers in decision making, measurement or evaluation of a firm’s performance, and 



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also to portray a firm’s value. Thus, for disclosed financial information to be useful, it must be relevant and faithfully represent 
what it purports to represent. The usefulness of financial information is enhanced if it is comparable, verifiable, timely and 
understandable (Conceptual Framework, 2010).  
 

Financial information supplies a key quantitative representation of Individual Corporation that supports a wide range 
of contractual relationships. According to the American Institute of Certified Public Accountants (AICPA. 2005), financial 
statements must properly reflect the organization’s financial and economic reality, so that the users are not induced to take 
decisions on misleading information. Financial information also enhances the information environment of the reporting entity 
and those associated with it. The quality of financial disclosure can impact on firms’ cash flows directly, in addition  to 
influencing the cost of capital at which the cash flows are discounted. Financial information, such as that conveyed in publicly 
disclosed accounting reports, is also critical to the analysis of temporal liquidity positions of equity markets.  
 

Financial information is information which describes an account for a utility. It processes financial transactions to 
provide external reporting to outside parties such as to stockholders, investors, creditors, and government agencies etc. For 
financial reporting to be effective, accounting information should be completed as relevant and reliable (Hendricks, 1976). The 
primary purpose of the financial statements is to provide information about a company in order to make better decisions 
particularly the investors (Germon and Meek, 2001).  
 
2.2 The Concept of Stock Price    
Stock price is the cost of purchasing a security on an exchange. It is affected by a number of factors including volatility in the 
market, current economic conditions, and popularity of the company. According to Ronen and Yaari (2008), the invention of 
double entry book keeping in the 14th century led to company’s valuation which is based upon ratios such as price per unit of 
earnings (from income statement), price per unit of net worth (from balance sheet) and price per unit of cash flow (cash flow 
statement). The next advance was to price individual price shares rather than the whole company. A price per dividend was the 
next advancement. Analysts find it appropriate to use discounted cash flow that is based on time value of money to estimate the 
intrinsic value of share rather than price per dividend of share prices.  

Stock price is based on supply and demand. It is used to refer to as a company’s market capitalization value. It is 
calculated by multiplying the number of shares issued by the price of the company's share. A company's share price is determined 
by daily trading between buyers and sellers on the relevant stock exchange. Market prices are easy to determine for assets as  the 
constituent values, such as stock and futures prices, are readily available. A valuation would have to be prepared using different 
methods (Ngerebo-a, 2007). 

Stock price is the value of an asset/security as determined by the forces of demand for and supply of the assets. It is 
the perceived or observed value of an asset on the market. It is also known as current value. It is in fact the mutually accepted 
worth (cost or price depending on the individual) of the asset after negotiation. Most assets that have market values have their 
values determined by specialized markets such as the stock exchange. The acceptance of any asset depends on the perception of 
the potential investor after comparing the Stock price to the intrinsic value. An asset is undervalued or under-price or favorably 
priced if the market value of the asset is less than the intrinsic value. If the intrinsic value of the asset is less the market value, 
then the asset is overvalued, over-priced or favorably priced. Where the latter occurs, the investor would ordinarily be acquiring 
an asset at more expensive value than he would ordinarily have paid. An investor would acquire an overpriced asset if he expects 
the asset to record a bullish price movement such that if the anticipated price movement crystallizes, the investor can make 
capital gain. 
 
 
2.3 Asset Turnover Ratio 
Assets turnover defined as the efficiency ratio which demonstrates the efficiency utilization of company’s assets in generating 
company’s sales. By using formula given by Malik and Ali (2013) assets turnover ratio calculated by taking sales divided by total 
assets. As explained by Malik and Ali (2013) firms found to be more efficient in utilizing its assets and generate sales when its 
assets turnover ratio reported to be high. They also said when the company reported high ratio of asset turnover lead to an 
increase in company’s profit and make the ratio to have positive and significant relationship with share price and this is 
witnessed in their own study by using a sample of 21 public companies from fuel and energy sector listed in Karachi stock 
exchange (KSE). Ozlen (2014) reported total assets turnover ratio to have negative and significant relationship with share price 
of metal-product and stone sectors listed in Istanbul stock exchange but positive and significant relationship exist with share 
price of stone sector, metal products sector, transportation sector and commerce sector. 
 
 

http://www.investopedia.com/university/economics/economics3.asp
http://www.investopedia.com/terms/m/marketcapitalization.asp


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2.4 Debt to Equity Ratio 
The debt-to-equity ratio is a financial ratio that shows the relative share of capital and debt used to finance the company's assets; 
this link is also known as risk, leverage or leverage." Some academics have had an impact on this dividend policy for companies. 
Companies with high growth rates and high dividend payouts use debt and high-leverage companies compared to their respective 
industries. However, there is contradictory evidence in the relationship between dividend payment rates and leverage. In some 
industries, payment rates and leverage are positively linked, while in other industries the ratio is negative. There is a statistically 
significant and negative relationship between risk and market value of a company. It is clear that higher risk companies pay 
dividends at a lower rate, which affects the market value of the companies. 
 
2.5 Dividend per Share  
Dividend per share is the sum of declared dividends issued by a company for every ordinary share outstanding; The figure is 
calculated by dividing the total dividends paid out by a business, including interim dividends, over a period of time by the 
number of outstanding ordinary share issued; A company's dividend per share is often derived using the dividend paid in the 
most recent quarter, which is also used to calculate the dividend yield;Dividend per share is an important metric to 
investors because the amount a firm pays out in dividends directly translates to income for the shareholder, and the dividend per 
share is the most straightforward figure an investor can use to calculate his or her dividend payments from owning shares of a 
stock over time (Pandey, 2015). At the same time, a growing dividend per share may also be a sign that the company's 
management believes that its earnings growth will be sustained. 

For the correct calculation of dividends per share, including interim dividends, dividends for the entire year, except 
special dividends, must be included; Special dividends are dividends that are expected to be issued only once and are therefore 
not included; Temporary dividends are dividends distributed to shareholders that have been declared and paid before the 
enterprise has determined its annual profit; If an entity has issued ordinary shares during the calculation period, the total number 
of ordinary shares outstanding is calculated over the reporting period on the basis of the weighted average number of shares,  
which is the same as that used for the share. 
 
2.6 Theoretical Review  
The theoretical approach to the relationship between financial accounting information and equity share investment can be 
discussed in terms of, accounting theories and theory of equity share investment. There are many financial accountingtheories. 
Theories of financial accounting consider such things as people’s behavioror people’s needs as regards financial accounting 
information, or the reasonswhy people within organizations might elect to supply particular information toparticular stakeholder 
groups (Deegan, 2006). This study looks at Efficient-market hypothesis (EMH), information perspective theory, accounting 
theory, decision usefulness theory of accounting information and signaling theory ofaccounting information among others 
theories. 
 
2.7 Efficient Market Hypothesis 
Efficient-market hypothesis (EMH) asserts that financial market is informationally efficient. There are three major forms of the 
hypothesis: "weak" semi-strong", and "strong". Weak EMH claims that prices on traded assets (for example, stock bonds, or 
property) already reflect all past publicly available information. Semi-strong EMH states that prices reflect all publicly available 
information and that prices instantly change to reflect new public information. Strong EMH additionally claims that prices 
instantly reflect even hidden or "insider" information. Efficient market theory implies that market will react quickly to new 
information (Goddy, 2010). Thus, it is important to know when the accounting report first became publicly known. The 
accounting report is informative only if it provides data not previously known by the market. 
 
2.8 Information Perspective 
Informational perspective measures the usefulness of accounting information to individual users without much emphasis on the 
precise structure of the relationship between accounting data and firm value (Bernard, 1995).  Most of the studies on 
information perspective assume that information content or usefulness can be determined by observing stock market reactions to 
specific accounting information items (Ball and Brown, 1968, Benston, 1967 and Anderson, 1975). These studies further assert 
that the degree of usefulness can be measured by the extent of volume or price change following release of the information. 

Until the last few years, the information perspective has dominated financial accounting theory and practice. The 
information perspective relies on a single-person decision theory, where it is the responsibility of an investor to predict future 
firm performance and make investment decisions. It also depends on efficient securities market theory, where the market can 
interpret information from any source (Beaver, 1973). In this theory, it is Accountant’s role to supply useful financial statement 
information to assist investors. Ball and Brown (1968) study is the first to document statistically a share price response to 
reported net income and their methodology is still employed today. The emphasis of information perspective is on 



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contemporary associations between accounting earnings (or book value) and market returns or prices. In particular, it investigates 
capital market reactions to public disclosures such as earnings announcements, other firm-specific news and economy-wide 
macroeconomic news. This is synonymous with information content school.   

 
2.9 Accounting Theory 
Accounting theory is defined as the basic assumptions, definitions, principles, and concepts that underlie accounting rule made 
by a legislative body and it also includes the reporting of accounting and financial information (Deegan, 2006). The basic 
theories of accounting are held together by the conceptual framework of accounting. The conceptual framework establishes 
objectives of financial reporting by businesses. By understanding how some basic accounting theories fit into the conceptual 
framework, one can determine the theoretical underpinnings of financial accounting rules and principles (Freedman, 2015).  

Financial Accounting Standards Board (FASB, 1976) defines accounting theory as acoherent system of interrelated 
objectives and fundamentals that can lead toconsistent standards. Watts and Zimmerman (1986) posit that accounting theory 
seeks to explain and predict accounting practice. Hendriksen (1982) describes an accounting theory as logical reasoning in the 
form of abroad set of principles that (1) provide a general frame of reference by which accounting practice can be evaluated and 
(2) guide the development of new practices and procedures. According to him, an accounting theory should provide a general 
frame of reference against which sound accounting practices can be evaluated. A theory encompasses a set of statements or 
propositions connected by rules of logic or inferential reasoning. The statements must include testable hypotheses or premises 
and a conclusion, although one or more of the premises may be based on explicit value judgments. The primary test of a theory, 
however, is its ability to explain or predict (Quintus, 2007). 
 
2.10 Empirical Review  
Wang et al (2013) empirically analyzes the relationship between accounting information, stock price and investor’s decision 
making with a few accounting information indexes, based on 60 listed companies in Shanghai Stock Exchange for 2011. The 
results of their study show that a positive relationship exists between accounting information and stock price, and that the 

accounting information of the listed companies has an important effect on the quoted companies‟ stock price and investors’ 
behaviour in the market, but the significant degree varies. Earnings per share and return on equity have the most significant 
correlation with stock price and investors decisions. 

Vijitha and Nimalathasan (2014) examined the relevance of accounting information such as earning per share (EPS), 
net assets value per share (NAVPS), return on equity (ROE) and price earnings ratio (P/R) to investors investment decision in 
listed manufacturing companies in Colombo Stock Exchange (CSE), Sri Lanka. Findings of their research revealed that 

accounting information has the significant impact on investors‟ investment decision and accounting information is significantly 
correlated with equity share investment decision.  

Shehzad and Ismail (2014) investigated the relevance of accounting information in banking sector of Pakistan. The 
study employed the pooled regression technique on nineteen private banks from the period of 2008 to 2012. Their findings 
showed that earning per share are more value relevant than book value, and that accounting data explains a high proportion of 
the investor’s equity share investment decisions.  

Glezakos, Mylonakis, and Kafouros (2012) studied the impact of earnings and book value on the stock prices and 
investors investment decisions of a sample of 38 companies listed in the Athens Stock Market during the 1996-2008 periods. 
The results concluded that the joint explanatory power of the above parameters in the formation of stock prices increases over 
time. The study further claimed that the impact of earnings is diminishing, compared to the book value, while investors strive 
towards analyzing the fundamental parameters of businesses.  

Sanjeet (2011) carried out a study on the determinants of equity share investment decision in India. The study 
examine the empirical relationship between equity share prices and explanatory variables such as: book value per share, dividend 
per share, earnings per share, price- earnings ratio, dividend yield, dividend pay-out, size in terms of sale and net worth for the 
period 1993-94 to 2008-09. The results revealed that earning per share, dividend per share and book value per share has 
significant impact on the equity share investment decision. Further, results of study indicated that dividend per share and 
earnings per share being the strongest determinants of equity share investment.  

AL- Shubiri (2010) carried out a study of the determinants of equity share investment at Amman Stock Exchange, 
Jordan. The sample of their study includes the 14 commercial banks of Amman Stock Exchange for the period 2005 -2008. 
Simple and multiple regression analyses were conducted to find out the relationship between microeconomic factors and the 
equity investment. The result of the study showed that there is highly positive significant relationship between equity share 
investment and net asset value per share; market price of stock dividend percentage, gross domestic product, and negative 
significant relationship on inflation and lending interest rate but not always significant on some years of Amman Stock Exchange 
in Jordan.  
 



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Suward (2009) investigated the nature of the relationship between accounting numbers and equity share investment in 
firms listed on the Jakarta Stock Exchange for the period 1992-2001. The study used dynamic modeling principles in addition 
to the more usual cross sectional analysis. The results of this study show that the accompanying equilibrium correlation 
relationship between equity share investment and book values for firms listed on the Jakarta Stock Exchange (JSX) can often be 
identified using accounting regressors. The result of the study showed that in Indonesia, compared to similar models estimated 
using US data, the book value of net assets seems to have a stronger relationship with stock investment. And it was argued that 
this may be a function of the relative importance of financial statements as a source of information on the JSX.  

Kiremu, Galo, Wagala, and Mutegi (2013) conducted study on the effect of annual earnings announcement at the 
Nairobi Securities Exchange (NSE) by analyzing changes in share prices and trading volumes for the period from 2006 to 2010. 
Abnormal returns during the event window of 91 days were determined using the event study methodology employing the 
market model on data from 5 listed companies. Further, the volume reactions were examined by use of the trading activity ratio 
(TAR). Inferential and descriptive statistics were used to test for significant effect on TAR and price changes. The results 
obtained indicate that the abnormal returns and TAR were not significant at 5% probability level. Thus the NSE is of semi-
strong efficiency, whereby it is not possible to earn abnormal returns in the NSE using the publicly available information 
According to Oyerinde (2011) found little known about the role of accounting information in terms of its ability to explain 
changes to the security prices and equity share investment of listed companies on the Nigerian Stock Exchange (NSE). Almost 
all evidence in this area is obtained from the United States or Western European countries which have sophisticated markets 
compared to most developing countries.  

Uwuigbe, Olowe, and Godswill (2012) examined the determinants of share prices in the Nigerian Stock Exchange 
Market. A total of 30 listed firms in the Nigerian Stock Exchange Market were selected and analyzed for the study using the 
judgmental sampling technique. The study basically modelled the effects of financial performance, dividend pay-out, and 
financial leverage on the share price of listed firms operating in the Nigerian stock exchange market using the regression analysis 

method. The results of the study revealed a significant positive relationship between firms‟ financial performance and the market 
value of share prices of the listed firms in Nigeria. Consequently, they concluded that firms  financial performance, dividend 
pay-outs, and financial leverage are strong determinants of the market value of share prices, which thus influenced equity share 
investment decision making in the listed companies in Nigeria.  

Pyemo  (2011) examined the stock market reaction to annual earnings information releases using data on the Nigerian 
Stock Exchange. Using the event study method, the speed of reaction of the market to annual earnings informat ion releases for a 
sample of 16 firms listed on the exchange is tested. Significant abnormal price reactions around earnings announcements suggest 
the earnings announcements contain value-relevant information. The study found that the magnitude of the cumulative 
abnormal returns is dominated by significant reactions 20 days before the earnings release date which suggests that a portion of 
the market reaction may be due to private acquisition and, possibly, abuse of information by insiders. The persistent downward 
drift of the cumulative abnormal returns, 20 days after the announcements is inconsistent with the efficient markets hypothesis, 
and therefore suggests that the Nigerian stock market does not efficiently adjust to earnings information for the sample firms 
within the study period. 

 Olugbenga and Atanda (2014) examined relationship between financial accounting information and market values of 
quoted firms in Nigeria examined value relevance of accounting information in the Nigerian Stock Exchange Market with a view 

to determining whether accounting information has the ability to significantly affect share prices and investors‟ investment 
decisions in quoted firms. The findings of their study revealed that there is a significant relationship between accounting 
information and share prices of firms listed on Nigerian Stock Exchange. They asserted that information on earnings, book 
value, dividend, and cash flows can be used to predict share prices of firms in Nigeria.  

Oshodin and Mgbame (2014) conducted a comparative study on the relevance of accounting information in the 
Nigeria banking and Petroleum sectors. 10 companies where randomly selected from each of these sectors. Data were collected 
on the Market Price per Share (dependent variable), Earning per Share, Book Value of Equity, and Leverage (independent 
variables) for the period 2007-2011, from the annual financial reports of the selected companies. The study hypothesized that 
there is no difference in the value relevance of accounting information in both the banking and oil and gas sectors. The study 
compares the value relevance of accounting numbers in these sectors. The study revealed that the earnings per share information 
is the most considered by investors when deciding the share price and that the financial information in the oil and gas is more 
relevant compare to the financial information disclosed by companies in the banking sector. 

Srinivasan (2012) conducted a study on the determinants of equity share prices in India. The study employs panel data 
consisting of annual time series data over the period 2006-2011 and cross-section data pertaining to 6 major sectors of the 
Indian economy. He claims that accounting information data of the industry are essential and immense helpful to investors and 
analysts in assessing the better stocks that belong to different industry groups. Accounting data provide critical information to 
shareholders and or investors as far as the company’s past performance is concerned, and are used extensively in forecasting 
future performance and valuations of equity. 



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Eleke and Opoku (2013) stated that accounting information released to the general public by firms directly or 
indirectly has a major influence on investors’ perceptions of the business, hence its value and both individual and institutional 
investors attach great importance to 3 information in the selection of portfolios of equity securities, bonds and other investments 
This study carried out an investigation into the relationship between accounting information and equity share investment in 
listed companies in Nigeria with a view to providing accounting information that will aid investors equity share investment 
decisions.  

Override (2011) stated that in the wake of the recent accounting scandals and economic meltdown where billions of 
naira of investment and retirement wealth has disappeared, the very integrity and survivability of the relevance of accounting 
information has been called to question. 

Mahmoudi, Shirkavand, and Salari (2011) examined the investor’s reactions to the announcement of earnings in the 
Tehran Stock Exchange in Iran. This study investigated the overreaction and under reaction of investors towards positive and 
negative earnings announcement dividing the sample into two groups. The first group contains firms which increased their EPS 
more than 5% rather than the previous EPS announcements. Group 2 contains firms which decreased their EPS more than 5% 
in comparison to the latest announcements. The results indicate that there is a statistically significant market reaction on the EPS 

announcement day. Earnings increases induce a significant positive equity share investors‟ reaction, whereas earning decreases 

bring about a significant negative equity share investors‟ reaction.  
Mgbame and Ikhatua (2013) investigated the accounting information and stock volatility in the Nigerian Capital 

Market. The broad objective of the study is to ascertain whether accounting information contributes to stock volatility in the 
Nigerian Capital Market. Specifically, the study examines if Book value per share, Dividend per share and Earnings per share 
have a sign effect on stock volatility in Nigeria. The results of the study show that the release of information on book values, 
earnings per share and dividend per share is found to be related to stock volatility.  

Glezakos et al (2012) examined the impact of earnings and book value in the formulation of stock prices and stock 
investors decisions. Using a sample of 38 companies listed in the Athens Stock Market during the 1996-2008 period, the results 
of the study suggests that the joint explanatory power of the above parameters in the formation of stock prices increases over 
time. However, they argued that the impact of earnings is diminishing, compared to the book value, while investors strive 
towards analyzing the fundamental parameters of businesses. 

Olugbenga and Atanda (2014) explored the functional relationship between earnings, book values, dividends, cash 
flow and equity share investment decisions in Nigeria. They found that accounting information, earnings, book values, 
dividends, cash flow from operations, has a direct/positive relationship with equity share investment decisions in Nigeria. They 
argued that earnings, book values, dividends, cash flow from operations, are statistically significant in explaining variations in 
equity share investors’ behaviours at 5% level of significance. Furthermore, they analyzed empirically the relationship between 
book values and equity share investment decision and from the results concluded that accounting information on book values 
has a positive relationship with equity share investment decisions in Nigeria. 

 Babalola (2012) investigated the relevance of accounting information in corporate Nigeria .The study employed 
simple descriptive statistics coupled with the logarithmic regression models to examine this interaction between the period 1999 
and 2009, and taking 40 companies from various sectors of the Nigerian economy as samples. The results of the study shows 
that earnings is more relevant than book values , that is, the earnings dictates more the corporate values of firms in Nigeria than 
the book value. Notwithstanding the importance of net book value per share in equity share investment decision makings, the 
book value per share may be manipulated by company management with a view to presenting favourable value of the company 
worth. Net book value per share may be manipulated by slowing down depreciation of assets, writing back of depreciation, 
fraudulent upward revaluation of assets, buying back of owned share and inclusion of outdate equipments in the company’s asset. 
Given these situations, the net book value will give an improvement rate which will be misleading to investors for investment 
decision makings. 

Perrera and Thrikawala (2010) conducted an empirical study of the Relevance of Accounting Information on 
investor’s decisions based on the Colombo Stock Exchange, Sri Lanka. The relevance of accounting data was measured by 
correlation coefficient with Market Price per Share (MPS) and selected accounting information such as earning per share (EPS), 
return on equity (ROE) and earning yield (EY). The findings claim that return on equity is significantly related with the share 
price and investor’s decisions.  

Wang et al (2013) carried out a study on the accounting information and investors reaction in Shanghai Stock 
Exchange, and reported that correlation analysis and regression analysis of accounting information and investors reaction show 
that the accounting information has some effect on equity investors’ reaction and stock price, but the significance diversified. 
They claimed that accounting information of rate of return on stockholders’ equity are most significant and that it has direct 
impact on investors decisions and share price.  
 



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Kabajeh et al (2012) examined the relationship between the return on equity( ROE) ratio and Jordanian insurance 
public companies share prices and equity share investors reactions during the period (2002-2007). The results of their study 
showed a positive relationship between the ROE ratio and Jordanian insurance public companies share prices. The results also 
revealed that equity share investors’ decisions are positively influenced by the return on equity.  

Uthman and Abdul-Baki (2014) investigated the effect of IFRS adoption on the value-relevance of accounting 
information in Nigeria. The IFRS was measured with more disclosure of economic events as well as the fair valuation of 
economic events under IFRS. The opinions of a number of financial analysts with were sourced. The results of the study show 
that IFRS adoption has enhanced the value relevance of accounting information in Nigeria. They recommend that more 
measures should be put in place to ensure full compliance of IFRS by all affected Nigerian entities.  

Adebimpe and Ekwere (2015) empirically examined whether the mandatory adoption of IFRS has improved the value 
relevance of financial information in the financial statements of commercial banks in Nigeria. The study considered a sample of 
twelve listed banks in Nigeria. Specifically, financial statement figures of 2010 and 2011 (pre-adoption period) and 2012 and 
2013 (post-adoption) were utilized. Descriptive statistics and least square regression were conducted to analyze the effect of 
IFRS adoption on the accounting information quality. The findings reveal that adoption of IFRS (accounting regulation) made 
earnings reported by Nigerian Commercial banks to become more informative to equity investors in determining the value of 
banks and that equity value and earnings of banks are relatively value relevant to share prices. The study submits that adopting 
the International Financial Reporting Standard (IFRS) have been empirically found to improve the quality of accounting 
information in some countries, thereby increasing its usefulness to stakeholders and recommends that Financial Reporting 
Council of Nigeria and other accounting standards setters should incorporate more measures to enhance the quality of the 
financial reporting in order to increase the value relevance of financial statements.  

Olawale (2014) examined the impact of International Financial Reporting Standard (IFRS) adoption on Banks 
performance in Nigeria. The study is based on the appraisal of IFRS compliance and Adoption. Both primary and secondary 
data were used in this study. The result of the analysis showed that adoption of IFRS significantly influenced financial reporting 
of banks in Nigeria and that there is significant relationship between IFRS and banks performance in Nigeria. 

Tsalavoutas, Andre, and Evans, (2012) examined the combined value relevance of book value of equity and net income 
before and after the mandatory transition to IFRS in Greece. Contrary to their expectations, they find no significant change in 
the explanatory power of value relevance regressions between the two periods. The coefficients on book value of equity and net 
income are positive and significant in both the pre-IFRS and post-IFRS periods.  
 
3. Methodology 
This study used correlation and ex-post facto research design to examine the effect of accounting information on market value of 
quoted in Nigeria. The population of this study consists of all the listed manufacturing firms on the Nigerian Stock Exchange 
and have complete financial records on their websites or Nigerian Stock Exchange for the period of 2008– 2017. The data was 
obtained from the annual reports and accounts of manufacturing firms.  
 
Model Specification  
In order to achieve the objectives of this study and test of the hypotheses, a functional relationship in form of multiple linear 
regression model consisting of dependent and independent variables will be formulated. The regression models are presented as 
follows;  
 
Pooled regression specification 

itititit DPSDERATOMV   3210
    1   

Fixed Effect Model Specification 

𝑀𝑉 = 𝛼0 + 𝛼1𝐴𝑇𝑂 + 𝛼2𝐷𝐸𝑅 + 𝛼3𝐷𝑃𝑆 +∑ =3𝑖 1𝛼𝑖𝑖𝑑𝑢𝑚𝜀1𝑖𝑡                            2 
 
Random effect model specification  

𝑀𝑉 = 𝛼0 + 𝛼1𝐴𝑇𝑂 + 𝛼2𝐷𝐸𝑅 + 𝛼3𝐷𝑃𝑆 + 𝜇𝑖 + 𝜀1𝑖𝑡                                      3  
Where:  
MV = Market value of Nigeria quoted manufacturing firms. 

0  = Regression intercept 

ATO = Assets turnover ratio 
DER = Debt equity ratio 



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DPS = Dividend per share 

  = Error term 

 
A-Priori Expectation of the Result 
The explanatory variables are expected to have positive and direct effects on the dependent variables. That is a unit increase in 

any of the variables is expected to increase market value. This can be express mathematically as  1,  2,  3,> 0. 

 
Technique for Data Analysis  
In order to determine the best choice of analysis technique, the study run three types of regression; Ordinary Least Square 
(OLS), Fixed Effect and Random Effect regression. All these method have various assumptions and conditions that must be 
fulfilled in order to achieve efficient estimates. However, the best techniques will be decided by the Hausman Specification test 
(either fixed effect or random effect regression) and Lagrangian Multpiplier Test (either random effect or OLS). The random 
effect has the advantage of accounting for the panel effect in the data as opposed to OLS, which pools the data and treats it as if 
it were obtained from a single entity. In order to achieve reliability of the result, robustness tests like Multicolinearity test, 
Hausman test, Lagrangian multiplier test for random effect and Heteroscedasticity test will be conducted(Gujirati, 2003).  
T-test The t-test was used to test the hypothesis that a particular coefficient is significantly different from zero or whether the 
estimated coefficient value occurred by chance in equation (2). The tests were performed at both 95% and 99% levels of 
confidence.  
 
F-test The F-statistic is important to test the hypothesis that the whole relationship provided by the equation (2) is significantly 
different from zero, i.e. whether the independent variables’ characteristics scores explain the variation in growth indicators for 
each of the individual firms. The test will be performed at both 95% and 99% levels of confidence.  
 
R2 - Change The R-squared (R2 ) value ranging from ‘0’ to ‘1’ or the ‘corrected R-squared’ (R2 ) which is adjusted for degrees 
of freedom indicates the explanatory power (goodness of fit) of the model. 
 
4. Analysis and Discussion of Findings 
 
Table 1: Test of Fixed and Random Effect Models 

Redundant Fixed Effects Tests   

Effects Test Statistic   d.f.  Prob.  

Cross-section F 1.529179 (22,192) 0.0069 

Cross-section Chi-square 35.681335 22 0.0636 

Correlated Random Effects - Hausman Test  

Test Summary Chi-Sq. Statistic Chi-Sq. d.f. Prob.  

Cross-section random 7.415428 6 0.0047 

Source:  Computed from E-View windows 9.0 
In testing the validity of the models, the fixed effects on the cross section Redundant Fixed Effect- Likelihood Ratio, the P- 
value is 0.000 indicating that the effects are significant. Select the random effect and perform the Correlated Random Effects- 
Hausman test, testing the random effects model against the fixed effects model. The null hypothesis in that case is that both 
tests are consistent estimators and the random effects model is efficient. Under the alternative hypothesis, only the fixed effect is 
consistent. Since the p- value is 0.000, the null hypothesis is rejected and, therefore, the fixed effects model is to be preferred. 
 
Table 2:Presentation of Formulated Pooled Effect Model Results 

Variable Coefficient Std. Error t-Statistic Prob.   

DER 0.031910 0.020106 1.587099 0.1140 

ATO 0.048064 0.047975 1.001859 0.3175 

BVPS -0.061550 0.067609 -0.910373 0.3636 

C 9.953181 1.835172 5.423568 0.0000 

R-squared 0.086439     Mean dependent var 14.93914 

Adjusted R-squared 0.074935     S.D. dependent var 2.146708 

S.E. of regression 2.121677     Akaike info criterion 4.373452 

Sum squared resid 963.3238     Schwarz criterion 4.481087 



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Log likelihood -476.2665     Hannan-Quinn criter. 4.416913 

F-statistic 1.870285     Durbin-Watson stat 1.662720 

Prob(F-statistic) 0.087183    

Source:  Computed from E-View windows 9.0 
 
The estimated pooled regression model found that the predictor variables in the model can explain 8 percent variation on the 
market value of the 23 selected manufacturing firms. The f- statistics and probability confirms that the model is statistically not 
significant and cannot predict the variation on the market value of the selected quoted firms. The Durbin Watson statistics 
proved that there is no presence of serial autocorrelation among the variables. Beta coefficient of the variables indicates that debt 
equity ratio and assets turnover rate have positive effect on market value of the quoted manufacturing firms  while book value 
per share have negative effect on market value of the firms.  The insignificant effect of the models and the results of the 
Hausman test enable us to analyze the fixed effect model in the tables below. 
 
Table 3:Presentation of Formulated Fixed Effect Model Results 

Variable Coefficient Std. Error t-Statistic Prob.   

DER 0.722684 0.021505 1.054861 0.0428 

ATO 0.032115 0.050056 0.641582 0.5219 

BVPS -0.030528 0.076752 -0.397752 0.6913 

C 12.36263 2.094911 5.901265 0.0000 

 Effects Specification   

Cross-section fixed (dummy variables)  

R-squared 0.789574     Mean dependent var 14.93914 

Adjusted R-squared 0.504834     S.D. dependent var 2.146708 

S.E. of regression 2.066219     Akaike info criterion 4.411093 

Sum squared resid 819.6977     Schwarz criterion 4.857006 

Log likelihood -458.4258     Hannan-Quinn criter. 4.591145 

F-statistic 1.624076     Durbin-Watson stat 1.905250 

Prob(F-statistic) 0.000169    

Source:  Computed from E-View windows 9.0 
 
The estimated pooled regression model found that the predictor variables in the model can explain 78 percent variation on the 
market value of the 23 selected manufacturing firms. The f- statistics and probability confirms that the model is statistically not 
significant and cannot predict the variation on the market value of the selected quoted firms. The Durbin Watson statistics 
proved that there is no presence of serial autocorrelation among the variables. Beta coefficient of the variables indicates that debt 
equity ratio and assets turnover rate have positive effect on market value of the quoted manufacturing firms  while book value 
per share have negative effect on market value of the firms.  The insignificant effect of the models and the results of the 
Hausman test enable us to analyze the fixed effect model in the tables below. 
 
Table 4:Presentation of Formulated Random Effect Model Results 

Variable Coefficient Std. Error t-Statistic Prob.   

DER 0.029011 0.020108 1.442768 0.0005 

ATO 0.044351 0.047723 0.929330 0.3538 

BVPS -0.055560 0.068658 -0.809227 0.4193 

C 10.52168 1.866897 5.635922 0.0000 

 Effects Specification   

   S.D.   Rho   

Cross-section random 0.472147 0.0496 

Idiosyncratic random 2.066219 0.9504 

 Weighted Statistics   

R-squared 0.441900     Mean dependent var 12.18603 

Adjusted R-squared 0.315038     S.D. dependent var 2.096432 

S.E. of regression 2.072931     Sum squared resid 919.5673 

F-statistic 1.559801     Durbin-Watson stat 1.726119 



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Prob(F-statistic) 0.040262    

 Unweighted Statistics   

R-squared 0.448637     Mean dependent var 14.93914 

Sum squared resid 964.5282     Durbin-Watson stat 1.658316 

Source:  Computed from E-View windows 9.0 
 
The estimated random regression model found that the predictor variables in the model can explain 44 percent variation on the 
market value of the 23 selected manufacturing firms. The f- statistics and probability confirms that the model is statistically 
significant and can predict the variation on the market value of the selected quoted firms. The Durbin Watson statistics proved 
that there is no presence of serial autocorrelation among the variables. Beta coefficient of the variables indicates that, return on 
equity, earnings per share, dividend per share, debt equity ratio and assets turnover rate have positive effect on market value of 
the quoted manufacturing firms  while book value per share have negative effect on market value of the firms.   The result above 
enables to test cross-sectional comparism of random and fixed effect in the table below: 
 
Table 5: Cross-Section Effect Test Comparism 

Variable Fixed   Random  Var. Diff Prob. Decision  

DER 0.022684 0.029011 0.000058 0.4067 Accept H0 

ATO 0.032115 0.044351 0.000228 0.4179 Accept H0 

BVPS -0.030528 -0.055560 0.001177 0.4656 Accept H0 

Source:  Computed from E-View windows 9.0 
 
The table above reveals the variance difference among the variables, as shown above that the variables are all statistically not 
significant which implies that there is a significant difference between fixed and random effect among the variables. 
 
Table 6: Presentation of Granger Causality Test Results  

 Null Hypothesis: Obs F-Statistic Prob.  

 DER does not Granger Cause MV  168  0.21023 0.8106 

 MV does not Granger Cause DER  2.59882 0.0774 

 ATO does not Granger Cause MV  170  1.45459 0.2365 

 MV does not Granger Cause ATO  2.30013 0.1035 

 BVPS does not Granger Cause MV  170  0.00118 0.9988 

 MV does not Granger Cause BVPS  0.25433 0.7757 

Source:  Computed from E-View windows 9.0 
 
The causality test above shows that there is no causal relationship among the variables, we accept null hypotheses. 
 
Table 7: Presentation of Panel Cointegration Test 

Series: MV DER ATO DPS    

Alternative hypothesis: common AR coefs. (within-dimension) 

    Weighted  

  Statistic Prob. Statistic Prob. 

Panel v-Statistic -2.429724  0.9924 -2.299783  0.9893 

Panel rho-Statistic  4.640154  1.0000  4.548191  1.0000 

Panel PP-Statistic -3.186873  0.0007 -3.047196  0.0012 

Panel ADF-Statistic  NA  NA  NA  NA 

Alternative hypothesis: individual AR coefs. (between-dimension) 

  Statistic Prob.   

Group rho-Statistic  6.156503  1.0000   

Group PP-Statistic -9.556352  0.0000   

Group ADF-Statistic  NA  NA   

Source:  Computed from E-View windows 9.0 
 



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The results of the cointegration test proved that  the variables are cointegrated as the probability coefficient of the variables are 
less than 0.05, we accept the alternate hypotheses that there is the presence of long run relationship between the dependent and 
the independent variables. The presence of long run relationship enables us to test for unit root; the table below has the details.  
 
Table 8:Tests of Stationarity 

Series:  MV    

Method Statistic Prob.** sections Obs 

Null: Unit root (assumes common unit root process)  

Levin, Lin & Chu t* -9.25205  0.0000  23  170 

Im, Pesaran and Shin W-stat  -3.15566  0.0008  23  170 

ADF - Fisher Chi-square  86.3823  0.0003  23  170 

PP - Fisher Chi-square  145.244  0.0000  23  197 

Series:  D(DER)   

Levin, Lin & Chu t* -22.8587  0.0000  23  159 

Im, Pesaran and Shin W-stat  -8.51342  0.0000  23  159 

ADF - Fisher Chi-square  150.519  0.0000  23  159 

PP - Fisher Chi-square  343.638  0.0000  23  182 

Series:  BVPS   

Levin, Lin & Chu t* -6.67509  0.0000  23  184 

Im, Pesaran and Shin W-stat  -3.05967  0.0011  23  184 

ADF - Fisher Chi-square  83.0036  0.0007  23  184 

PP - Fisher Chi-square  156.215  0.0000  23  207 

Series:  ATO    

Levin, Lin & Chu t* -5.96046  0.0000  23  184 

Im, Pesaran and Shin W-stat  -3.37459  0.0004  23  184 

ADF - Fisher Chi-square  88.9042  0.0002  23  184 

PP - Fisher Chi-square  190.177  0.0000  23  207 

Source:  Computed from E-View windows 9.0 
 
The table above presents the summary results of the ADF and PP panel unit root tests. The results show that the null 
hypotheses of a unit root test for first difference series for all the variables can be rejected at all the critical values indicating that 
the level series which is largely time-dependent and non-stationary can be made stationary at the first difference and maximum 
lag of one. Thus, the reduced form model follows an integrating order of 1(1) process and is therefore a stationary process. It 
also reveals that the test of stationarity in the residuals from the level series regression is significant at all lags. Furthermore, this 
indicates that the regression is no more spurious but real. That is to say, all the variables are individually stationary and stable. At 
this level, all the t-statistic became significant at 5 percent. 
 
Table9:Phillips-Peron Results (Non-Parametric) 

Cross ID AR(1) Variance HAC   Bandwidth Obs 

Aluminium Extrusion -0.161 0.646540 0.619755 2.00 9 

Austin Laz and Company -0.843 0.083477 0.064919 1.00 9 

Paints and Coatings 0.013 2.090620 1.597237 3.00 9 

Berger Paints  Dropped from Test  

Beta Glass  Dropped from Test  

Cadbury Nigeria -0.475 0.300930 0.049049 8.00 9 

Cement Co. of North  Dropped from Test  

Champion Brew. Plc -0.229 0.968705 0.574934 6.00 9 

Premier Paints Plc  Dropped from Test  

Dangote Cement Plc -0.447 0.455981 0.210542 4.00 9 

Dangote Flour Mills Plc 0.260 0.517686 0.507708 1.00 9 

DN Tyre & Rubber Plc -0.249 1.806874 1.806874 0.00 9 

Evans Medical Plc  Dropped from Test  

Flour Mills Nig. Plc  Dropped from Test  



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P Z Cussons Nigeria Plc -0.618 0.295691 0.223230 2.00 9 

Vitafoam Nig Plc -0.101 0.232916 0.216321 4.00 9 

Glaxo Smithkline Consumer 
Nig. Plc 

-0.442 0.099122 0.048300 8.00 9 

Honeywell Flour Mill Plc -0.738 0.480678 0.169825 5.00 9 

Lafarge Africa Plc  Dropped from Test  

Nestle Nigeria Plc  Dropped from Test  

May & Baker Nigeria Plc 0.054 1.171200 0.428968 8.00 9 

Flour Mills Plc. -0.432 0.064481 0.064481 0.00 9 

Nascon Allied Industries -0.396 0.259262 0.251736 1.00 9 

Source:  Computed from E-View windows 9.0 
 
The result of the power for all the test procedure when the underlying time series model is stationary AR, all the procedures 
produced a reasonably high power over all the sample sizes and order considered except at order 2 where ADF (Augmented 
Dickey Fuller) and KPSS produced extremely low power compared to PP. Under this condition, Philip-Peron (PP) has the 
highest power over all the sample sizes and AR orders considered. The table   presents similar analysis on stationary MA, the 
power of the tests are extremely high over all the sample sizes and orders considered. Similar conclusion as in AR was also 
observed here. Table 3 presents the power of the mixed model (Stationary ARMA), all the test procedures produced high power 
over all the sample sizes at order 1 but ADF and KPSS produced low power over all the sample size at order 2 & 3. 
 
4.1 Discussion of Findings  
Findings revealed that there is positive but not significant relationship between assets turnover rate and the market value of the 
quoted manufacturing firms over the periods covered in this study. This implies that variation in assets turnover rate of the firms 
does significantly relate to market value of the firms.  The coefficient of the variables proved that a unit increase on the variables 
will lead to 0.3 percent increase on the market value. This finding confirms the a-priori expectation of the study and validates 
the fundamentalists’ theory on the effect of information on the stocks prices of quoted firms. The findings of this study 
contradict the findings of King and Langli (1998) that both the book value and the earnings per share have significant relation 
with the stock price and hence equity investment decision, the findings of Omoye, and Eriki, (2014) balance sheet information 
has significant positive influence on the probability of companies that adopt high earnings management but contradict the 
findings of  Muhammed (2014) that board composition, institutional shareholding, managerial shareholding and audit 
committee significant negative relationship with earnings quality. 

Findings revealed that there is positive and significant relationship between assets turnover rate and the market value of 
the quoted manufacturing firms over the periods covered in this study. This implies that variation in debt equity rates of the 
firms does significantly relate to market value of the firms.  The coefficient of the variables proved that a unit increase on the 
variables will lead to 7 percent increase on the market value. This finding confirms the a-priori expectation of the study and 
validates the fundamentalists’ theory on the effect of information on the stocks prices of quoted firms. The findings of this  
study contradict the findings of King and Langli (1998) that both the book value and the earnings per share have significant 
relation with the stock price and hence equity investment decision, the findings of Omoye, and Eriki, (2014) balance sheet 
information has significant positive influence on the probability of companies that adopt high earnings management but 
contradict the findings of  Muhammed (2014) that board composition, institutional shareholding, managerial shareholding and 
audit committee significant negative relationship with earnings quality. 

Findings revealed that there is positive and significant relationship between dividend per share and the market value of 
the quoted manufacturing firms over the periods covered in this study. This implies that variation in dividend per share of the 
firms significantly relate to market value of the firms.  The coefficient of the variables proved that a unit increase on the variables 
will lead to 9 percent increase on the market value. This finding confirms the a-priori expectation of the study and validates the 
fundamentalists’ theory on the effect of information on the stocks prices of quoted firms. The findings of this study contradict 
the findings of King and Langli (1998) that both the book value and the earnings per share have significant relation with the 
stock price and hence equity investment decision, the findings of Omoye, and Eriki, (2014) balance sheet information has 
significant positive influence on the probability of companies that adopt high earnings management but contradict the findings 
of  Muhammed (2014) that board composition, institutional shareholding, managerial shareholding and audit committee 
significant negative relationship with earnings quality. 

 
5. Conclusions  
The results of study through secondary data analysis revealed that accounting information and market value are correlated and 
there is a strong and significant relationship between accounting information disclosed in firms’ financial statements and market 



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value. Accounting information significantly influenced market value decisions in the listed companies in Nigeria. This finding 
was substantiated by the R2 of   78 percent variation explained by the accounting information variables modeled in the study. 
The results of the investigation revealed that there is a strong relationship between accounting information and market value of 
the quoted firms  

All accounting information variables considered in this study significantly influenced market value of the quoted firms. 
Further, results of study indicated that debt equity ratio, assets turnover significantly affect market value of the quoted f irms. 
However, dividend per share has no significant effect. From the above, this study conclude that accounting information have 
significant effect on the market value of quoted firms in Nigeria. 

 
6. Recommendations 
 Base on the findings of the study, the following recommendations are formulated: 

 Management of the firms should formulate dividend policy that will enhance the market value of the firms an optimal 
capital structure should be formulated and corporate strategies toward internal and external factors that affect Earnings 
per Share negatively of the manufacturing firms should be discouraged in the firms and factors that affect positively 
should be encouraged. 

 Accounting regulatory bodies in Nigeria and preparers of accounting reports should make efforts toward improving 
the quality of published financial reports because the reports are widely used by investors in Nigeria and foreign 
investors for investment decision.  

 The study found positive relationship between assets turnover and market value, therefore corporate strategies should 
be toward internal and external factors that affect assets turn negatively of the manufacturing firms should be 
discouraged in the firms and factors that affect positively should be encouraged.  

 
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