Abstract

Digital financial reporting has become a critical innovation in corporate reporting, transforming the manner in which financial information is prepared, disclosed, accessed, and utilized by investors and other stakeholders. The rapid advancement of digital technologies, including eXtensible Business Reporting Language (XBRL), cloud-based accounting systems, Enterprise Resource Planning (ERP) systems, artificial intelligence (AI), blockchain technology, and integrated financial reporting platforms, has significantly enhanced the efficiency, transparency, comparability, and accessibility of financial information. Unlike traditional financial reporting methods, digital financial reporting facilitates real-time dissemination of financial data, automated processing of accounting information, standardized reporting formats, and improved communication between reporting entities and capital market participants. In Nigeria, the increasing digitalization of financial reporting has been encouraged by regulatory institutions such as the Financial Reporting Council of Nigeria (FRCN), the Securities and Exchange Commission (SEC), the Nigerian Exchange Group (NGX), and the Central Bank of Nigeria (CBN), with the objective of improving corporate transparency, strengthening investor confidence, and enhancing the efficiency of the Nigerian capital market. Investors increasingly depend on timely, reliable, relevant, and transparent financial information when evaluating investment opportunities and making portfolio allocation decisions. Consequently, digital financial reporting is expected to reduce information asymmetry, improve market efficiency, enhance corporate transparency, and facilitate informed investment decisions. Despite these anticipated benefits, challenges such as inadequate digital infrastructure, cybersecurity risks, inconsistent reporting practices, limited digital literacy among investors, and varying levels of technological adoption continue to influence the effectiveness of digital financial reporting in Nigeria. Furthermore, empirical evidence regarding the relationship between digital financial reporting and investment decisions within the Nigerian capital market remains limited and inconclusive. Against this background, this study investigates the impact of digital financial reporting on investment decisions in the Nigerian capital market. The study is anchored on Signaling Theory, the Efficient Market Hypothesis (EMH), and the DeLone and McLean Information Systems Success Model. Signaling Theory posits that organizations adopting high-quality digital financial reporting systems communicate positive signals regarding transparency, accountability, and financial credibility, thereby influencing investors' perceptions and investment decisions. The Efficient Market Hypothesis argues that capital markets respond efficiently to publicly available financial information, implying that timely and accurate digital financial reporting contributes to more efficient investment decisions and improved market performance. The DeLone and McLean Information Systems Success Model explains that effective digital reporting systems improve information quality, system quality, and user satisfaction, thereby enhancing decision-making effectiveness among investors and other capital market participants. Collectively, these theoretical perspectives provide a comprehensive framework for explaining the relationship between digital financial reporting and investment decisions in the Nigerian capital market. The study adopts a quantitative research design using a structured questionnaire administered to institutional investors, retail investors, stockbrokers, investment analysts, portfolio managers, financial analysts, accountants, auditors, fund managers, and other participants within the Nigerian capital market. A stratified random sampling technique will be employed to ensure adequate representation of respondents from investment firms, stockbroking companies, asset management firms, pension fund administrators, listed companies, regulatory institutions, and other relevant financial organizations. Primary data collected from respondents will be analyzed using descriptive statistics to summarize respondents' demographic characteristics and perceptions regarding digital financial reporting and investment decision-making. Structural Equation Modeling (SEM) will be employed to examine the impact of digital financial reporting on investment decisions. The measurement model will be evaluated using Cronbach's Alpha, Composite Reliability (CR), Average Variance Extracted (AVE), and Confirmatory Factor Analysis (CFA) to establish the reliability and validity of the research instrument. Additional diagnostic tests, including multicollinearity assessment, common method bias analysis, and model fit indices such as the Comparative Fit Index (CFI), Tucker-Lewis Index (TLI), Root Mean Square Error of Approximation (RMSEA), and Standardized Root Mean Square Residual (SRMR), will be conducted to ensure the adequacy, consistency, reliability, and robustness of the structural model. The study anticipates that digital financial reporting will have a significant positive impact on investment decisions in the Nigerian capital market. The adoption of digital financial reporting technologies is expected to improve the timeliness, accuracy, relevance, completeness, comparability, and reliability of financial information, thereby enabling investors to make more informed investment decisions. Digital reporting systems are also anticipated to reduce information asymmetry, improve financial transparency, enhance corporate disclosure quality, and facilitate quicker access to financial information, thereby strengthening investor confidence and market participation. Furthermore, the integration of technologies such as XBRL, cloud accounting, artificial intelligence, and digital reporting platforms is expected to improve financial analysis, reduce decision-making uncertainty, enhance investment risk assessment, and promote greater efficiency within the capital market. Companies adopting advanced digital financial reporting systems are therefore expected to attract increased investor interest, improve market valuation, enhance liquidity of their securities, and strengthen long-term shareholder value. Conversely, inadequate digital reporting infrastructure, weak cybersecurity controls, inconsistent reporting standards, and poor-quality financial disclosures may reduce investor confidence, increase perceived investment risk, and adversely affect investment decisions. Consequently, effective digital financial reporting is expected to contribute significantly to improved investment decision-making, greater market efficiency, enhanced corporate transparency, and sustainable capital market development in Nigeria. This study is expected to make significant theoretical and empirical contributions to the literature on accounting, finance, information systems, and capital market studies by providing robust evidence on the relationship between digital financial reporting and investment decisions in the Nigerian capital market. Unlike previous studies that broadly examined financial reporting quality or accounting information systems, this research specifically evaluates digital financial reporting as a strategic determinant of investment decision-making using primary data and Structural Equation Modeling (SEM). The findings will provide valuable insights for the Financial Reporting Council of Nigeria (FRCN), the Securities and Exchange Commission (SEC), the Nigerian Exchange Group (NGX), the Central Bank of Nigeria (CBN), listed companies, institutional and retail investors, stockbrokers, investment analysts, professional accounting bodies, policymakers, and academic researchers regarding the strategic importance of digital financial reporting in promoting transparency, investor confidence, and capital market efficiency. The study will also provide evidence-based recommendations for strengthening digital reporting infrastructure, promoting the adoption of international digital reporting standards such as XBRL, enhancing cybersecurity governance, improving financial disclosure quality, expanding investor education, and fostering sustainable growth and competitiveness within the Nigerian capital market.

Keywords: Digital financial reporting, investment decisions, Nigerian capital market, financial reporting quality, eXtensible Business Reporting Language (XBRL), investor confidence, capital market efficiency, Structural Equation Modeling (SEM), corporate disclosure, Nigeria.