MODERATING EFFECT OF LEVERAGE ON THE VALUE RELEVANCE OF ACCOUNTING INFORMATION IN THE NIGERIAN LISTED OIL AND GAS FIRMS
Journal Title: Gusau Journal of Accounting and Finance - Year 2020, Vol 1, Issue 1
Abstract
The study investigates the moderating effect of leverage on the value relevance of accounting information in the Nigerian listed oil and gas firms. The study used correlational research design and the data was extracted from the published annual financial reports of the firms for the independent variables and the moderator. On the other hand, the data for the dependent variable (share prices) was collected from Nigerian stock exchange website. A sample size of 6 firms were used for a period of eight years (2011-2018). The data was analysed using multiple regression analysis. Findings from the analysis showed that earnings per share, and leverage to be value relevant. Additionally, book value per share moderated with leverage was value relevant in addition to earnings per share moderated with leverage as well. Based on the findings, the study recommends that listed oil and gas firms in Nigeria should strategize to improve their earnings, Moreover, they should also find way of managing their book value, as any unnecessary investment means negative effect on share price. Additionally, listed oil and gas firms should maintain an appropriate level of leverage so that the cheap cost of leverage will reduce the weighted average cost of capital and subsequently increase value to investors. Finally, the explanatory power of the moderated variables are more than the ones not moderated.
Authors and Affiliations
Aliyu Abubakar, Muhammad Yusuf Shuaibu, Adamu Magaji
Keywords
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