Financial Reporting Quality and Market Value of Listed Industrial Goods Companies in Nigeria

Abstract

Financial reporting quality plays a critical role in shaping investor perceptions and firm valuation, yet empirical evidence from Nigeria’s industrial goods sector remains limited. This study investigated the effect of financial reporting quality on the market value of listed industrial goods companies in Nigeria, with a focus on disclosure quality and reporting timeliness. The study is motivated by persistent declines in market value, regulatory sanctions for late reporting and information asymmetry, which undermine investor confidence and market efficiency. An ex post facto research design was adopted, analyzing secondary data from seven (7) purposively sampled industrial goods companies listed on the Nigerian Exchange Group (NGX) over the period 2014–2023. Data were extracted from audited annual reports, including financial statements, notes and disclosures. Financial reporting quality was measured using a disclosure index and reporting timeliness, while Tobin’s Q served as the market-based proxy for firm value. Descriptive statistics summarized trends, and panel regression analysis examined the effect of disclosure quality and timeliness on market value. All analyses were conducted using Jamovi Statistical Software (Version 2.6.26), selected for its robust statistical capabilities and user-friendly interface. The results revealed that disclosure quality and reporting timeliness have positive and statistically significant effects on market value, indicating that firms providing comprehensive and timely financial information are valued higher by investors. Firm size exhibited a positive but statistically insignificant effect, suggesting that scale alone does not guarantee higher valuation. The study concluded that financial reporting quality is a key driver of firm valuation in Nigeria’s industrial goods sector. Accordingly, the study recommended that firms should strengthen disclosure practices, enhance reporting timeliness, improve governance and managerial accountability. Emphasising  that investors evaluate firms based on reporting quality rather than firm size alone.