EARNINGS QUALITY AND FIRMS BOOK VALUE: AN EMPIRICAL EVIDENCE FROM THE LISTED FIRMS IN NIGERIA
The study examined the effect of earnings quality on book value of quoted companies in Nigeria from 2000 to 2016. A sample of 51 firms was purposively selected for the study out of the population of 173 firms that were listed on the Nigerian Stock Exchange for the period. The study adopted Ex-post facto research design. Data extracted from the published audited financial statements of the firms. Pooled OLS technique was employed in data analysis. The study measured earnings quality with four separate earnings attributes: Accruals quality (AQ), earnings persistence (EPERS), earnings predictability (EPRED), and earnings smoothness (ESMOTH). The study revealed that earnings quality significantly affected book value of the listed firms in Nigeria. Specifically, accruals quality (AQ), earnings persistence (EPERS) and earnings smoothness (ESMOTH) each had a positive effect on book value while earnings predictability (EPRED) had negative effect on book value. By implication, since investors and analysts value high earnings quality, the study suggested that, constancy of earnings and discretionary nature of accruals should be considered, managers should equally ensure information disclosure to enhance quality of earnings and credibility of reported book value.
THEOPHILUS ANAEKENWA AGUGUOM
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