Abstract
In a company with a group structure, financial information is presented in two folds via consolidated and separate financial statements. The reporting of the similarly classified elements of financial statements arranged side by side in two columns carrying two different figures may be puzzling. Consequently, investors and other financial information users having two different figures available to them need to be guided as to which set(s) of information they need to make predictions and decisions. This study provides evidence about the comparative value relevance of accounting information for consolidated and separate financial statement of listed financial service firms in Nigeria. The study population is the entire listed financial services firms throughout the period of 2014-2018. Accounting information was represented by earnings per share, book value per share, dividend per share, and cash flow per share. These proxies were regressed against the market price per share. Data for accounting information were sourced from the annual reports of sampled firms and market prices from the Nigerian stock exchange factbook. A census sampling was used after a three-point filter was applied to the original population. The results show generally that both consolidated and separate accounting information is value relevant. However, consolidated accounting information is found to be more value relevant than separate accounting information. The study thus recommends the strengthening of firms’ operations, re-evaluation of the dividend policy, and enhanced implementation of IFRS standards to enhance value relevant accounting information that will be useful to the shareholders in making informed decision and taking adequate actions.
Highlights
Accounting involves the measurement, processing, and communication of financial information about entities
This section focuses on the presentation, analysis, and interpretation of the STATA 13 results done on data collected over 2014 – 2018 for the sampled listed financial service firms in Nigeria
The study concludes that earnings per share has a negative impact on share price because losses made by companies ordinarily will repel more investment opportunities than companies that consistently report profits
Summary
Accounting involves the measurement, processing, and communication of financial information about entities. According to Anandarajan and Hassan (2010), value relevance is the influence of specific financial statement information, such as reported earnings, to explain changes in equity values. It analyzes if an accounting variable reflects information used by investors when valuing the equity of a company, and it depicts the operation of relevance and reliability quality of financial report (Barth et al, 2001). Value relevance is viewed as the degree of responsiveness of change(s) in stock price to change(s) in accounting information available to the users of such information as presented in the financial statement of companies
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