Financial Statements Content and Investment Decisions-A study of Selected Firms

  • AE Osuala
  • EC Ugwumba
  • JI Osuji


This work empirically investigates the effect of information content of financial statements on shareholders’ investment decisions. The study is vital as it portrays the extent to which shareholders of firms listed on the Nigerian Stock Exchanged (NSE) are influenced by the contents of published accounts in their investment decisions.In order to determine the relationship between information contents of financial statements and shareholders’ investment decisions, some of the key contents of financial statement were used to derive theproxy variables used in thestudy, namely profitability, dividend per share, earnings per share, leverage, and liquidity; while shareholders’ investment decisions is represented by change in number of shares. Data for the study were obtained from the published annual financial report of the selected firms. Regression model was employed to establish the relationship between the variables.The findings generally indicate that shareholders in the Nigerian capital market do not rely much on financial statements as a major determining factor for their investment decisions. It was observed that other factors or variables outside firms’ annual reports such as regularity of dividend payment and market price of shares are vital to shareholderstheir investment decisions. The study recommends proper awareness creation by the appropriate agencies to enhance shareholders’ understanding of the relevance of published accounts to enable them to know the financial states of the companies of their interest before making investment decisions. Besides, shareholdersshould seek the advice of financial analysts so as to be properly guided in their investment decisions.

Keywords:Financial statements, shareholders, investments, published accounts


Journal Identifiers

eISSN: 1596-8308