Unlocking Investment Opportunities: Role Of Economic Growth on the Relationship Between Accounting Fundaments and Share Price of Firms in North Eastern Nigeria

Abstract

Accounting fundamentals has been described as one of the key factors considered by investors when taking investment decisions. Previous studies focused on the role of accounting information on share price and completely underestimated the influencing role of real Gross Domestic Product (RGDP) on the relationship. Scholars have suggested that RGDP is important in understanding and explaining the change in share prices. Therefore, this study extended on the Ohlson model to incorporate RGDP so as to examine the moderating role of RGDP on the relationship accounting fundamentals and share price of listed manufacturing firms in Nigeria Exchange Group. The study covers 65 firms listed on the NGX for the period 2012 to 2021. The data for the study was sourced from NGX fact book and the Central bank Bulletin. The methods used for testing the information content of various accounting information were Ordinary Least Squared (OLS), Random Effects Model (REM), Fixed Effects Model (FEM). The findings from the analysis indicate that RGDP has significant moderating role on the relationship between accounting fundamentals and share prices. The study also reveals that Earning per share and Net book value per share and Price Earnings ratio are positively and significantly related to share price of listed manufacturing companies in NGX. Also reveals that PE is positively and insignificantly related to share price of listed manufacturing companies in NGX. On the basis of these findings, it was concluded that RGDP is a determinant for unlocking investment opportunities through accounting fundamentals in NGX. By implication, the reliability of accounting Fundamentals of listed manufacturing companies 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 accounti