THE IMPACT OF FINANCIAL REPORTING ON INVESTMENT DECISION OF SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA

Abstract

This paper examined the impact of financial reporting on the investment decisions of small and medium-scale enterprises in Nigeria. The study was carried out to determine the challenges facing small and medium enterprises (SMEs) in adopting effective financial accounting reporting in Nigeria and to ascertain the contribution of poor credit facilities to inadequate accounting records in SMEs in Nigeria. Survey methods and time series data were used, and data were collected with questionnaires and the CBN statistical bulletin. The generated data were analyzed with a simple percentage table. The study found that the challenges facing SMEs in the preparation and presentation of financial reports are inadequate accounting books and records, manpower, the accounting system, and not running their transactions through the banking system. The study recommends, among others, that since keeping proper books of account and preparing financial records can only be done by professional accountants, the two main bodies in Nigeria, ICAN and ANAN, should encourage their members to offer free professional service to SMEs in Nigeria.