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Effect of Accounting Information Disclosure on Share Price of Listed Companies in Nigeria

Abstract

Accounting information disclosure is a fundamental principle of corporate reporting that enhances transparency, reduces information asymmetry, and facilitates informed investment decisions in capital markets. It involves the timely, accurate, complete, and reliable presentation of financial and non-financial information to shareholders, potential investors, creditors, regulators, and other stakeholders through annual reports, financial statements, and other corporate disclosures. High-quality accounting information disclosure strengthens investors' confidence by providing relevant information about a firm's financial position, operating performance, cash flows, risks, governance practices, and future prospects. In Nigeria, the adoption of International Financial Reporting Standards (IFRS), stricter disclosure requirements by the Securities and Exchange Commission (SEC), the Nigerian Exchange Group (NGX), the Financial Reporting Council of Nigeria (FRCN), and the Companies and Allied Matters Act (CAMA) has significantly improved corporate financial reporting practices. Despite these regulatory reforms, concerns persist regarding the adequacy, timeliness, credibility, and comprehensiveness of accounting information disclosed by listed companies. Cases of financial statement manipulation, delayed financial reporting, inadequate disclosures, earnings restatements, and corporate governance failures have continued to undermine investor confidence and market efficiency. Since share price reflects investors' perceptions of a company's current performance and future prospects, the quality and extent of accounting information disclosure play a vital role in influencing stock market valuation. Companies that provide transparent and comprehensive financial disclosures are more likely to attract investors, reduce uncertainty, improve market confidence, and enhance share value. Conversely, poor disclosure practices may increase information asymmetry, weaken investor trust, reduce market liquidity, and negatively affect share prices. Although numerous empirical studies have examined corporate disclosure practices and market performance, findings remain inconclusive, particularly within the Nigerian capital market. Against this background, this study investigates the effect of accounting information disclosure on the share price of listed companies in Nigeria.The study is anchored on Signaling Theory, Agency Theory, and Efficient Market Hypothesis (EMH). Signaling Theory posits that managers communicate the financial strength and future prospects of their firms through voluntary and mandatory disclosures, thereby influencing investors' perceptions and market valuation. Agency Theory explains that comprehensive accounting information disclosure reduces information asymmetry and agency conflicts between managers and shareholders by enhancing transparency and accountability. The Efficient Market Hypothesis argues that stock prices adjust rapidly to publicly available information, implying that accounting disclosures are reflected in the market value of companies. Collectively, these theoretical perspectives provide a comprehensive framework for explaining the relationship between accounting information disclosure and the share price of listed companies in Nigeria.The study adopts an ex post facto research design utilizing secondary data obtained from the audited annual reports and financial statements of companies listed on the Nigerian Exchange Group (NGX), together with stock market data obtained from the NGX, the Securities and Exchange Commission (SEC), the Financial Reporting Council of Nigeria (FRCN), and the Central Bank of Nigeria (CBN). A longitudinal panel data approach covering a ten-year period will be employed to examine the relationship between accounting information disclosure and share price over time. Purposive sampling will be used to select listed companies with complete and consistent financial and market information throughout the study period. Accounting information disclosure will be measured using the Accounting Disclosure Index (ADI), disclosure quality score, timeliness of financial reporting, voluntary disclosure level, compliance with IFRS disclosure requirements, and financial reporting transparency indicators, while share price will be measured using annual closing share price, market capitalization, market value per share, Price-to-Earnings (P/E) Ratio, Market-to-Book Ratio (MBR), and stock return indicators. Data analysis will involve descriptive statistics to summarize the characteristics of the study variables, correlation analysis to determine the degree of association among variables, and panel regression techniques, including Fixed Effects and Random Effects models, to estimate the effect of accounting information disclosure on share price. The Hausman specification test will determine the most appropriate estimation model, while diagnostic tests including multicollinearity, heteroskedasticity, autocorrelation, stationarity, normality, cross-sectional dependence, endogeneity, and model specification tests will be conducted to ensure the validity, consistency, and robustness of the empirical findings.The study anticipates that accounting information disclosure will have a significant positive effect on the share price of listed companies in Nigeria. High-quality financial disclosures are expected to reduce information asymmetry, improve investor confidence, strengthen market transparency, and enhance the credibility of corporate financial reports, thereby increasing demand for companies' shares and improving market valuation. Comprehensive disclosures relating to earnings performance, cash flows, corporate governance, sustainability initiatives, risk management, and future business prospects are anticipated to facilitate informed investment decisions and reduce perceived investment risk. Furthermore, timely publication of financial statements and compliance with regulatory disclosure requirements are expected to improve market efficiency, enhance liquidity, attract institutional investors, and strengthen shareholders' confidence. Conversely, inadequate, inaccurate, or delayed accounting disclosures may increase uncertainty, reduce investor trust, discourage investment, and negatively influence share prices. Consequently, listed companies that maintain high standards of accounting information disclosure are expected to achieve stronger market performance, higher share prices, greater investor confidence, improved corporate reputation, and enhanced long-term shareholder value.This study is expected to make significant theoretical and empirical contributions to the literature on accounting, corporate finance, financial reporting, and capital market research by providing robust evidence on the relationship between accounting information disclosure and the share price of listed companies in Nigeria. Unlike previous studies that concentrated primarily on earnings announcements or selected disclosure attributes, this research adopts a broader perspective by examining the overall quality and extent of accounting information disclosure and its implications for market valuation using firm-level longitudinal panel data. The findings will provide valuable insights for the Nigerian Exchange Group (NGX), the Securities and Exchange Commission (SEC), the Financial Reporting Council of Nigeria (FRCN), listed companies, investors, financial analysts, policymakers, auditors, professional accounting bodies, and academic researchers regarding the strategic importance of transparent financial reporting in promoting capital market efficiency and investor confidence. The study will also provide evidence-based recommendations for strengthening corporate disclosure practices, improving financial reporting quality, enhancing regulatory compliance, promoting transparency and accountability, protecting investors' interests, and fostering sustainable growth and efficiency within the Nigerian capital market.

Keywords: Accounting information disclosure, share price, listed companies, financial reporting quality, disclosure index, capital market, investor confidence, panel regression, Nigerian Exchange Group (NGX).