ABSTRACT
This research work empirically investigates
the effect of information content of financial statement on shareholders'
investment decisions. This study is vital as it portrays the extent which
information content of financial statement influences shareholders in making
investment decisions. The study is significant to shareholders as to the
importance of proper investigation of the financial statement of the companies
of their interest so as to make efficient and effective investment decisions.
To determine the relationship between information content of financial
statement and shareholders' investments, some contents of financial statement
were used as variables in this work. These include profitability — proxied by
Profit after Tax to Total Assets, Dividend Per Share, Earnings Per Share,
Leverage — proxied by Total Liabilities to Total Assets, and Liquidity —
proxied by Current Assets to Current Liabilities; while shareholders'
investments was represented by Logarithm of Change in Number of Shares — Change
in Number of Shares was proxied by Number of Shares in the current year less
Number of Shares in the previous year. Regression model was employed to
establish the relationship as secondary data sourced from Annual Financial
Reports of selected companies were used for the analysis. The result indicates
a positive relationship between information content of financial statement and
shareholders' investment decisions; however, profitability and leverage appear
to pose greater influence on shareholders' investment decisions than other
contents of financial statement, having tested significant at 5% significant
level. From the findings generally, the following conclusions were drawn:
Shareholders do not see financial statement as a major determinant factor for
their investment decisions. Other factors such as stability of dividend and
market price of shares are also considered so as to make effective and
efficient investment decisions. Companies whose goal is to maximize
shareholders' wealth through payment of dividend attract larger number of
shareholders. Companies who want more equity than debt will not see
maximization of earnings per share as a good objective, as that will mean
nonpayment of dividend which will rather scare investors from investing in such
companies. it is therefore recommended that shareholders should make proper
investigation about the financial state of the company of their interest before
making investment decisions; and should seek the advice of financial analysts
so as to be properly guided in their investment decisions. Companies should
avoid misstating their financial statements as such actions have negatively
affected the confidence of the shareholders on financial statements. Companies
should maintain the shareholders' wealth maximization objective through regular
payment of dividend so as to ensure that shareholders receive the benefits of
their investment as at when due.
UGWUMBA, C (2021). Empirical Investigation Of The Information Content Of Financial Statement And The Effect On Shareholders' Investment Decisions. Mouau.afribary.org: Retrieved Nov 01, 2024, from https://repository.mouau.edu.ng/work/view/empirical-investigation-of-the-information-content-of-financial-statement-and-the-effect-on-shareholders-investment-decisions-7-2
C., UGWUMBA. "Empirical Investigation Of The Information Content Of Financial Statement And The Effect On Shareholders' Investment Decisions" Mouau.afribary.org. Mouau.afribary.org, 30 Jun. 2021, https://repository.mouau.edu.ng/work/view/empirical-investigation-of-the-information-content-of-financial-statement-and-the-effect-on-shareholders-investment-decisions-7-2. Accessed 01 Nov. 2024.
C., UGWUMBA. "Empirical Investigation Of The Information Content Of Financial Statement And The Effect On Shareholders' Investment Decisions". Mouau.afribary.org, Mouau.afribary.org, 30 Jun. 2021. Web. 01 Nov. 2024. < https://repository.mouau.edu.ng/work/view/empirical-investigation-of-the-information-content-of-financial-statement-and-the-effect-on-shareholders-investment-decisions-7-2 >.
C., UGWUMBA. "Empirical Investigation Of The Information Content Of Financial Statement And The Effect On Shareholders' Investment Decisions" Mouau.afribary.org (2021). Accessed 01 Nov. 2024. https://repository.mouau.edu.ng/work/view/empirical-investigation-of-the-information-content-of-financial-statement-and-the-effect-on-shareholders-investment-decisions-7-2