Accounting Information and Value Relevance: A Quinquennial Comparison of Pre- and Post-IFRS Adoption of Listed Firms in Nigeria and South Africa

Abstract

This study examined accounting information and value relevance: A quinquennial comparison of pre- and post-IFRS adoption of listed firms in Nigeria and South Africa. Panel data were collected from listed Non-financial firms in Nigeria (from 2007-2016) and South Africa (2000-2009). The Ex-Post facto research design was adopted for the study. In line with the objectives set for the study, 6 research questions and hypotheses were formulated and tested using pooled OLS methodology. The independent variable is accounting information proxied by Book value per share (BVPS), Earning per share (EPS), Firm size (FS), Leverage (LEV), Cash flow (CF) and Current ratio (CURR), while the dependent variable is value relevance proxied by the share price. Findings for Nigeria firms suggest that Book value per share, earnings per share, Firm size, leverage and cash flow are positively significant to share price and has higher value relevance in the post-IFRS periods than the pre-IFRS periods whereas the current ratio has an negative insignificant effect on share price and has no value relevance in both pre and post-IFRS periods. The findings for South African firms suggest that Book value per share, earnings per share and Firm size have a significant positive effect on share price and have higher value relevance in post-IFRS periods than in pre-IFRS periods, but leverage and cash flow have an insignificant positive effect on share price while current ratio has an insignificant negative effect on share price and do not have value relevance in pre and post-IFRS periods. The study concludes that there is a higher value relevance of accounting information in post-IFRS periods than in the pre-IFRS periods in Nigeria and South African firms. Overall, by comparison, accounting information was more value relevance amongst Nigerian firms than South African firms. Consequently, the study recommends that for Nigerian firms, investors and the financial analyst should consider Book value, Earnings per share, Firm size, Leverage and Cash flow as the relevant variables that determine share price, whereas for South African firms, Book value per share, Earnings per share and Firm size are the main variables that determine share price.