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- THE IMPACT OF PERFORMANCE EVALUATION THROUGH THE ANALYSIS OF FINANCIAL STATEMENT ON INVESTMENT DECISIONS (A CASE STUDY OF LOGMAN NIGERIA PLC.)
- AN ASSESSMENT OF BUSINESS ENVIRONMENT AND ITS IMPACT ON ORGANIZATIONAL GROWTH (A Case Study of Oil Down Stream in Nigeria.)
- EFFECT OF BUSINESS STRESS ON THE PERFORMANCE OF SMALL SCALE ENTERPRENUER
- THE EFFECT OF GOVERNMENT EXPORT PROMOTION POLICIES ON THE DEVELOPMENT OF EXPORT BUSINESS IN NIGERIA (A STUDY OF THE NIGERIAN EXPORT PROMOTION COUNCIL [NEPC])
- EFFECT OF MANAGEMENT BY OBJECTIVES ON ORGANIZATION PERFORMANCE (A CASE STUDY OF VITAMALT PLC)
- THE EFFECTS OF CORPORATE SOCIAL RESPONSIBILITY ON PROFITABILITY AND CORPORATE IMAGE OF A PRIVATE ORGANIZATION “A STUDY OF SOME MANUFACTURING FIRMS IN NIGERIA”
- EFFECTS OF PERFORMANCE EVALUATION THROUGH THE ANALYSIS OF FINANCIAL STATEMENT ON INVESTMENT DECISIONS (A CASE STUDY OF LOGMAN NIGERIA PLC.)
- IMPACT OF THE BANKING SECTOR ON DISCHARGE OF SOCIAL RESPONSIBILITY BY SMALL SCALE BUSINESS ORGANISATION (A CASE STUDY OF TASHO ENTERPRISE AND LUWOJU HOTEL)
- THE IMPACT OF ELECTRONIC BANKING ON THE PERFORMANCE OF BANKING IN NIGERIA (A Case Study of Eco Bank Plc)
THE IMPACT OF FINANCIAL ACCOUNTING QUALITY ON THE CORPORATE PERFORMANCE OF BUSINESS ORGANIZATION (A CASE STUDY OF NIGERIAN BREWERY INDUSTRY)
This study examines the impact of financial accounting quality on the corporate performance of business organization. Providing high quality financial reporting information is important because it will positively influence capital providers and other stakeholders in making investment, credit, and similar resource allocation decisions enhancing overall market efficiency. The broad objective of the study is to ascertain if the adoption of IFRS by the organization moderates the effect of financial reporting quality. The primary source of data collection was used and the simple random sampling was used to select 23 personnel as the sample size. The chi-square statistical tool was used to test the stated hypotheses and the findings revealed that the level of corruption perception in the organization moderate the effect of financial reporting quality on corporate performance. It was concluded that the financing reporting quality issued by the financial reporting standard of Nigeria encourages uniformity as well as provides a common ground for evaluation of business performance. It was recommended among others that users of financial statement should be efficiently knowledgeable on statement of financial reporting standard paying attention to the disclosure requirement so as to enable them to defect non-compliance with such financial reporting standard.
TABLE OF CONTENTS
Title Page i
Chapter One: Introduction 1
1.1 Background to the Study 1
1.2 Statement of Problem 3
1.3 Research Questions 4
1.4 Objectives of the Study 4
1.5 Statement of Hypotheses 5
1.6 Significance of the Study 5
1.7 Scope of the Study 7
1.8 Limitations of the Study 7
Chapter Two: Review of Related Literature 9
2.1 Introduction 9
2.2 Concept of Financial Reporting 10
2.3 Meaning of Corporate Performance 13
2.4 Corporate Performance Measurement 14
2.5 The Relationship Between Financial Reporting Quality
and Financial Performance 15
2.6 Impact of Financial Reporting Quality on profitability 18
2.7 The Effect of Financial Reporting Quality on Investment Efficiency 20
2.8 Financial Reporting Quality and Sub-Optimal
Investment Levels 23
2.9 Measurement Methods to Assess the Quality of Financial Reporting 25
2.10 Moderating Factors in the Relationship between
Financial Reporting Quality and Financial Performance 29
Chapter Three: Research Method and Design 33
3.1 Introduction 33
3.2 Research design 33
3.3 Description of the Population of the Study 33
3.4 Sample Size 34
3.5 Sampling Techniques 34
3.6 Sources of Data Collection 34
3.7 Method of Data Presentation 35
3.8 Method of Data Analysis 35
Chapter Four: Data Presentation, Analysis and Interpretation 37
4.1 Introduction 37
4.2 Presentation of Data 37
4.3 Data Analysis 37
4.4 Hypothesis Testing 47 Chapter Five: Summary of Findings, Conclusion
and Recommendations 55
5.1 Introduction 55
5.2 Summary of Findings 55
5.3 Conclusion 56
5.4 Recommendations 57
1.1 Background to the Study
The quality of financial statements is not an indicator that can be easily quantified, as it cannot be observed directly, being based on the perception of the users of financial information. Each category of users has its own expectations and perceptions regarding what information is useful and of good quality.
Recent studies in the field of economics and accounting are analyzing more and more the term of financial accounting quality. One of the main objectives of the large number of papers upon this subject consists of finding an appropriate measure for it. That is why, it is important to understand what financial accounting quality represents and how it can be explained and quantified.
Due to the markets and business globalization, geographical expansion and the greater demand for information and transparency among investors, stakeholders and society in general, market agents find their toehold in the quality of their financial reporting and their main source of knowledge on company strategy.
According to Jonas and Blanchet (2010), financial reporting is not only a final output; the quality of this process depends on the influence and category of the report, including disclosure of the company’s transactions, information about the selection and application of accounting policies and knowledge of the judgments made. Financial information issued by a company has become an essential resource for any market participant, since it provides a reduced amount of information asymmetries between managers, investors, regulatory agencies, society and other stakeholders. Therefore, one of the main questions that arises about the quality of financial reporting is its effect on subsequent performance of a company, i.e. how the market values this higher perceived quality.
According to previous evidence, those companies with better quality of financial information are associated with subsequent higher performance, due to the fact that the market positively assesses those companies which are more committed to the issuance of good information for shareholders and other stakeholders, aiming to reduce or avoid information asymmetries between market participants (Ahmed & Duellmand, 2011). Furthermore, the manager’s decision and his discretional behaviour have an influence on corporate performance through the strategic management process. Thus, it is necessary to know the manager’s actions, decisions and behaviour, corporate strategy and accounting policies among others, to highlight and determine the causes of firm’s company performance.
1.2 Statement of Problem
The study analyzes the impact of financial accounting quality on the corporate performance of business organization using Nigerian Brewery Industry as the case study. Financial reporting quality has been on a decline place in corporate management of business organizations in Nigeria. Another problem is the level of corruption perception in the country of origin moderates and the effect of financial reporting quality on corporate performance.
1.3 Research Questions
The following are the research questions;
i. How does the adoption of IFRS by the organization moderates the effect of financial reporting quality?
ii. How effective is the accounting system of the organization on financial reporting quality?
iii. How does corruption perception in the organization moderate the effect of financial reporting quality?
1.4 Objective of the Study
The broad objective of this study is to examine the impact of financial accounting quality on the corporate performance of business organization. However, the following are the sub-objectives;
i. To ascertain if the adoption of IFRS by the organization moderates the effect of financial reporting quality.
ii. To determine how the accounting system of the organization moderates the effect of financial reporting quality.
iii. To examine the level of corruption perception in the organization and how it moderate the effect of financial reporting quality.
1.5 Statement of Hypotheses
The adoption of IFRS by the organization does not moderate the effect of financial reporting quality.
The accounting system of the organization does not moderate the effect of financial reporting quality.
The level of corruption perception in the organization does not moderate the effect of financial reporting quality on corporate performance.
1.6 Significance of the Study
Shareholders/Business Financers: As a result of the separation stakeholders influence from maximum control in modern organization, a practices of financial accounting quality is implemented on behalf of shareholders to reduced agency cost and information asymmetry.
The General Public: The researcher is beneficial to members of the public by providing them with accurate understanding of the meaning, purpose and impact of financial accounting quality on corporate performance as it may deemed fit and how it affect firms in particular and the entire economy.
Users of financial statements: Users of financial statements can get further insight about financial strength and weakness of a company if they properly analyze information reported in these statements. Therefore, financial analysis is the process of identifying financial strength establishing relationship between the items in the statement of position and statement of comprehensive income.
Future Researchers: This study will be of great use to intending researchers in this aspect of accounting. From this, one can affirm that this work when completed will be of immense use to various parties within the business and academic setting.
1.7 Scope of the Study
This study examines the impact of financial accounting quality on the corporate performance of business organization using Nigerian Brewery Industry as the case study. Benin City of Edo State was majorly focused on and this study covered a time frame of 5 years (2011 – 2015) and it adopted a sample size of 23 for effective survey.
1.8 Limitations of the Study
In the course of this study, some problems were encountered.
Firstly, the study was carried out amidst a tight academic schedule; thus, frequent interruption with lectures, test and private reading was not uncommon.
Secondly, financial means was a major setback. The researcher’s financial means was grossly inadequate as a result; the compass of the researcher’s movement and the study was circumscribed. It was difficult to obtain some information as they were deemed to be confidential by the companies visited.
Insufficient books in the library also limited the effort of the researcher in carrying out an in-depth research on the project work.
In the face of the above limitations, it was virtually impossible to carryout an in-depth study. However, every attempt possible has been to capture the main purpose and the objectivity of the study.