VALUE RELEVANCE OF FINANCIAL REPORTING AND RETURN ON EQUITY OF QUOTED OIL AND GAS COMPANIES IN NIGERIA

Abstract

Abstract
This study examined the value relevance of accounting information derivable from financial reports
of quoted oil and gas companies in Nigeria to determine the return on equity to investors in the
industries from 2015 to 2020. Data from ten (10) (71.4%) out of (14) (100%) fourteen listed oil and
gas companies in Nigeria were analyzed by adopting an ex post facto research design with Panel data
analysis. The result obtained showed a significant effect of value relevance of accounting
information (VR) on returns on equity (ROE) of oil and gas industries in the period as the P-value
0.0149 < 0.100 level of significance which indicates that financial reporting quality proxied by the
value derived has a significant effect on the return on equity of oil and gas companies in Nigeria.
Based on this result, ROE – a prominent determinant of firm performance can be guaranteed by
quality financial statements proxied by accounting information relevant to the industry, Thus, the
article concluded that the value derived from financial reporting will enhance investment in the
industry as return on equity will be enhanced. The study concluded among other factors that the value
of accounting information derivable from quality financial reporting is significant in taken prudent
investment decisions. In the industry. The study recommends enhancement of Financial Reporting
Quality based on IFRS provisions, frequency in reporting, and avoidance of manipulation of
accounting data that are contained in the financial statement of oil and gas industries in Nigeria

Keywords: Amortization, Value Relevance, ROE, Financial Impairment, Quality