VALUE RELEVANCE OF COMPLIANCE WITH RELATED PARTY DISCLOSURES (IAS 24) IN LISTED FINANCIAL SERVICES COMPANIES IN NIGERIA
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Date
2019-12-04
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Ahmadu Bello University Zaria
Abstract
Financial report should provide necessary information on the operation and performance of
entity that stakeholders can at any time relied on. The study seeks to know the value relevance of
compliance with related party disclosures (IAS 24) in listed financial services companies in
Nigeria. The population consisted of the 57 financial services companies listed on the Nigeria
stock exchange as at 31 December 2017, while the sample size was 41 listed financial services
companies in Nigeria. A period of six years was covered from 2012-2017. The source of data
was secondary data. Correlational research design was adopted to examine how accounting
numbers; book value per share and earnings per share together with compliance with the
requirements of related party disclosures (IAS 24) affect share prices of listed financial services
companies in Nigeria. Price model by Ohlson (1995) was used and data collected were analysed
using pooled ordinary least square regression analysis. Findings from the analysis show that the
coefficient of extensive/overall compliance is positive and statistically significant. Earning per
share has a positive and significant relationship with market price per share both in high and low
compliance model, but the coefficient is higher in high compliance than low compliance model.
Also when compliance with related party disclosure is high, the relationship between book value
per share and market price per share is positive and significant. Since under both high and low
compliance, the market price per share will increase, Financial Reporting Council of Nigeria
needs to ensure compliance with related party disclosures IAS 24 with stiff measures by
establishing an evaluation system to monitor high and low compliance with the standard. A
factual feedback mechanism should also be integrated within the financial sector for an
appropriate signaling for inadequate compliance with standard.