Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Influence of Accounting Information Quality on Investor Confidence of Industrial Goods Companies in Nigeria

TONYE, Ogiriki, AMULA, Eyipamere Patience

Abstract

This study investigated the influence of accounting information quality on investor confidence in the Nigerian industrial goods sector. Specifically, it examined the effects of timeliness and faithful representation of financial information on share price performance. Using secondary data from eight industrial goods companies listed on the Nigerian Exchange Group (NGX) over the period 2018 to 2024, the study adopted an ex-post facto research design. Timeliness was measured by the number of days between financial year-end and the publication of financial statements, while faithful representation was proxied by engagement with Big 4 audit firms. Investor confidence was captured through share price data, and all collected data were analyzed using panel least squares regression techniques, with cross-sectional dependence tested through the Residual Cross-Section Dependence Test to ensure robust estimates. The findings revealed that timeliness of accounting information had a significant negative effect on investor confidence, with a coefficient of -2.64 (p = 0.000), indicating that delays in reporting undermined market trust. Conversely, faithful representation through Big 4 audit engagement exhibited a strong positive effect, with a coefficient of 95.78 (p = 0.000), highlighting the value investors place on credible financial statements. The study concluded that both timely disclosure and audit credibility are essential for enhancing investor confidence, offering practical guidance for firms and regulators seeking to strengthen transparency and trust in the industrial goods sector.

Keywords

Information QualityTimelinessFaithful RepresentationInvestor Confidence

References

Adebayo, M., & Akinola, P. (2021). Financial reporting quality and investor confidence in Nigeria. Journal of Finance and Investment Analysis, 10(3), 78-95. Adeyemi, S., & Oladipo, T. (2021). Audit quality and financial reporting in emerging economies. International Journal of Accounting Research, 14(2), 45-62. Almeida, R., & Fernandes, C. (2019). The role of accounting information in investment decision- making. Journal of Financial Studies, 12(1), 34-50. Baker, M., & Wurgler, J. (2007). Investor sentiment in the stock market. Journal of Economic Perspectives, 21(2), 129-151. Balogun, O., & Omolade, S. (2019). Corporate governance and investor trust: Evidence from Nigeria. African Journal of Accounting and Finance, 8(4), 102-119. Brown, L., Smith, J., & Wilson, K. (2018). Transparency and market confidence: The impact of financial reporting quality. Journal of International Accounting Research, 17(2), 60-79. Chen, Y., Huang, R., & Zhang, L. (2020). Accounting quality and investor behavior: Evidence from emerging markets. Emerging Markets Review, 44, 100706. Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signaling theory: A review and assessment. Journal of Management, 37(1), 39-67. Eze, C., & Ugochukwu, I. (2022). Financial reporting practices and investment decisions in Nigeria's industrial sector. Nigerian Journal of Economics and Management, 15(1), 55-73. Healy, P. M., & Palepu, K. G. (2001). Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature. Journal of Accounting and Economics, 31(1-3), 405-440. Khan, A., & Ali, R. (2019). Timeliness of financial reporting and its effects on market valuation. International Journal of Financial Reporting, 11(2), 88-105. Li, J., Wang, S., & Zhao, Y. (2020). Timely disclosure and investor confidence: Empirical insights. Accounting Horizons, 34(1), 45-61. Nguyen, T., Tran, Q., & Le, H. (2018). Accounting information quality and stock market volatility. Asia-Pacific Journal of Accounting & Economics, 25(3-4), 337-354. Oluwaseun, O., & Okoye, E. (2020). Corporate governance, reporting quality, and investor perception in Nigeria. Journal of African Business, 21(2), 210-230. Patel, D., & Rao, K. (2018). Faithful representation in financial reporting and investor confidence. Journal of Accounting Research, 56(5), 1123-1145. Singh, R., & Goyal, P. (2021). Financial transparency and investment behavior in emerging markets. Emerging Economies Finance Journal, 9(1), 15-34. Wang, H., Liu, X., & Chen, Y. (2021). Accounting information quality and investor trust. Journal of International Financial Management & Accounting, 32(1), 1-25. Zhou, F., & Li, M. (2019). Reporting quality and market confidence in developing economies. Journal of Emerging Market Finance, 18(2), 123-145.

More Articles from INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT

Bridging Legal, Financial, and Data Governance in Enterprise AI: Emerging Trends

Author: Funmilayo Ashore-Onisemo, Ebehiremen Faith Iziduh, Uchechi Mary-Linda Unamma, Ifeanyichukwu Jeffrey Okwesa

Macroeconomic Policies and Economic Stability in Nigeria

Author: Abel-Tariah Emmanuel Onate, Okon, Ekanem Nsikhe, Nwenyi Francis Onwe

Determinants of Bank Liquidity in Nigeria

Author: Nelson Johnny Ebifemo-ere Stephen