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Value Relevance of Earnings, Book Value and Operating Cash Flows: Evidence from Listed Industrial Goods Companies in Nigeria

Essiet, Peace Okon, Mrs. Eno G. Ukpong PhD, UwakmfonAbasi J. Simeon PhD

Abstract

This study examined the relationship between value relevance of earnings, book value and operating cash flows: evidence from listed industrial goods companies in Nigeria over the period 2015–2024. The study adopted an ex-post facto research design and utilised a balanced panel dataset comprising 120 firm-year observations from 12 listed industrial goods companies selected from a population of 15 firms on the Nigerian Exchange. Market Price Per Share was used as the proxy for market value, while Earnings Per Share , Book Value Per Share , and Cash Flow from Operations Per Share were examined as accounting information variables, with firm size included as a control variable. Data was obtained from audited annual reports, financial statements, NGX publications, company websites, and Securities and Exchange Commission records. The data were analysed using descriptive statistics, Pearson correlation analysis, diagnostic tests, and panel regression techniques using EViews. The descriptive results revealed substantial variations in market prices and accounting information across the sampled firms. Correlation analysis showed strong positive relationships between MPS and EPS (r = 0.8789), CFFO (r = 0.8701), and BVPS (r = 0.8189), while firm size exhibited a moderate positive correlation with MPS (r = 0.6123). The findings provide preliminary evidence that accounting information is relevant to the market valuation of listed industrial goods companies in Nigeria. The study recommends improved quality, transparency, and timeliness of financial reporting to enhance the usefulness of accounting information to investors and other capital-market participants. JAFM JAFM JAFM

Keywords

Accounting InformationEarnings Per ShareBook Value Per ShareCash Flow from OperationsMarket Price Per ShareIndustrial Goods CompaniesNigeria.

References

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