The Role Of Accounting Information In Investment Decision Making

ABSTRACT

This research was conducted after a thorough consideration of the role of accounting information in investment decision making. There is growing pressure around the world to promote greater transparency and disclosure, consistent with the importance of the growth of world trade and investment. Disclosure regulation varies internationally and there is often a lack of transparency especially in the emerging economies. From the study, we discovered that the quality of accounting information in terms of its accuracy, adequacy, reliability and mode of disclosure is a major determinant of the level of efficiency of the capital market and other decision tasks.

This study considered a total of 20 companies quoted on the Nigerian Stock Exchange (NSE). The use of questionnaire was introduced in order to receive direct (primary) information from the companies. The findings in this study suggested among other things, that the current level of accounting information made available to potential and existing investors requires significant improvement. The researcher therefore recommends strict compliance with prescribed accounting information disclosure requirements. This could be achieved if the relevant regulatory agencies effectively pursue the disclosure requirements recognized by laws, while making sure that corporate entities who default are made to face due penalties, thus protecting innocent investors from undue heartaches.

Further suggestion for the study; hereby introduce transparency in accounting related forecast. Since most financial report forecasts have been discovered to suffer actual realization, suggestion is made that relevant regulatory agencies should hold managers of corporate bodies responsible for any significant variance between projected and realised performance.

Conclusively, there’s need for relevant regulatory agencies to alert investors on the extent to which they can rely on the accounting information provided in financial or corporate reports, as a basis for making their investment decisions, while specifically disclosing the limitation of such accounting information being provided.

TABLE OF CONTENTS

TITLE PAGE i

CERTIFICATION ii

DEDICATION iii

ACKNOWLEDGMENT iv

ABSTRACT v

TABLE OF CONTENTS vi

CHAPTER ONE: INTRODUCTION

1.0 BACKGROUND TO THE STUDY 1

1.1 STATEMENT OF THE PROBLEM 3

1.2 THE OBJECTIVES OF THE STUDY 5

1.3 RESEARCH QUESTIONS 6

1.4 RESEARCH HYPOTHESIS 6

1.5 SIGNIFICANCE OF THIS STUDY 7

1.6 SCOPE AND LIMITATIONS OF THE STUDY 7

1.7 DEFINITION OF TERMS 8

REFERENCES 9

CHAPTER TWO: LITERATURE REVIEW

2.0 INTORDUCTION 10

2.1 EARLY HISTORY OF ACCOUNTING 10

2.2 LUCA PACIOLI’S CONTRIBUTION 12

2.3 DEVELOPMENT OF DOUBLE-ENTRY BOOKKEEPING 13

2.4 RELEVANCE OF ACCOUNTING HISTORY 16

2.5 BACKGROUND ON STOCKHOLDERS EQUITY 17

2.6 EVOLUTION OF VALUE-BASED METHODOLOGIES 19

2.7 INFORMATION AND ACCOUNTING INFORMATION 20

2.8 THE ACCOUNTING INFORMATION SYSTEMS 22

2.9 USERS OF ACCOUNTING INFORMATION 24

2.10 THE PURPOSE OF ACCOUNTING INFORMATION 24

2.11 NATURE OF FINANCIAL STATEMENTS 25

2.12 ACCOUNTING INFORMATIO4 TOOLS 30

2.13 INVESTMENTS CHARACTERISTICS THEORY 31

2.14 TEST OF RELIABILITY OF ACCOUNTING INFORMATION 34

2.15 QUALITATIVE CHARACTERISTICS OF FINANCIAL INFORMATION 35

2.16 COMPONENTS OF ANALYSIS 37

2.17 INVESTMENT AND INVESTMENT DECISIONS 39

2.18 IN VESTMENT ASSETS 41

2.19 RELEVANCE OF ACCOUNTING INFORMATION 45

2.20 ACCOUNTING RATIOS FOR INVESTMENT DECISIONS 46

2.21 BENEFITS OF ACCOUNTING INFORMATION TO INVESTMENT

DECISION MAKERS 48

REFERENCES 49

CHAPTER THREE: RESEARCH METHODOLOGY

3.0 INTRODUCTION 51

3.1 POPULATION AND SAMPLING 51

3.2 METHOD OF SURVEY RESEARCH 52

3.3 ADMINISTRATION OF QUESTIONNAIRES 52

3.4 PROCEDURE FOR DATA PROCESSING AND ANALYSING 52

CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA

4.0 INTRODUCTION 53

4.1 RESPONDENTS’ CHARACTERISTICS AND CLASSIFICATIONS 53

4.2 PRESENTATION AND ANALYSIS OF DATA ACCORDING TO

RESEARCH QUESTIONS 55

4.3 TEST OF HYPOTHESIS 61

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.0 SUMMARY 65

5.1 CONCLUSION 65

5.2 RECOMMENDATIONS 66

5.3 SUGGESTIONS FOR FURTHER STUDY 67

BIBLIOGRAPHY 68

QUESTIONNAIRE 70

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(2016, 08). The Role Of Accounting Information In Investment Decision Making.. ProjectStoc.com. Retrieved 08, 2016, from https://projectstoc.com/read/7868/the-role-of-accounting-information-in-investment-decision-making-2087

"The Role Of Accounting Information In Investment Decision Making." ProjectStoc.com. 08 2016. 2016. 08 2016 <https://projectstoc.com/read/7868/the-role-of-accounting-information-in-investment-decision-making-2087>.

"The Role Of Accounting Information In Investment Decision Making.." ProjectStoc.com. ProjectStoc.com, 08 2016. Web. 08 2016. <https://projectstoc.com/read/7868/the-role-of-accounting-information-in-investment-decision-making-2087>.

"The Role Of Accounting Information In Investment Decision Making.." ProjectStoc.com. 08, 2016. Accessed 08, 2016. https://projectstoc.com/read/7868/the-role-of-accounting-information-in-investment-decision-making-2087.

The Role Of Accounting Information In Investment Decision Making

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