VALUE RELEVANCE OF ACCOUNTING INFORMATION IN THE NIGERIAN BANKING SECTOR

ABSTRACT

The purpose of this study is to examine the relationship between the value relevance of accounting information and listed banks in Nigeria. Specifically, the study examined the effect of earnings per share, dividend per share, book value per share, and return on equity, on share prices of banks in Nigeria. Data was extracted from a sample consisting of ten(10) banks quoted on the Nigerian stock exchange between the years 2018-2022. Ordinary Least Square regression model was employed in estimating the data and testing the formulated hypothesis before interpretation of results. The findings revealed that value relevance of accounting information was positively related to share price but the relationship was found to be insignificant. The study also revealed that earnings per share and book value per share are not significant to share prices of Nigerian banks. The findings also revealed that there is a significant and positive relationship between return on equity and share price of banks in Nigeria while dividend per share was found to be negatively significant to share prices. In line with the findings, the study recommends that a holistic approach, considering a diverse set of financial indicators, must be employed by market participants, for a comprehensive understanding of market dynamics. This is because the study found out that there are complexities and nuances inherent in market valuation.