ISSN: 1204-5357

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Research Article Open Access

Financial Reports and Shareholders’ Decision Making in Nigeria: Any Connectedness?


The preeminent objective of this paper is to ascertain the impact of financial statements on shareholders’ investment decision making in Nigeria. We employed the use of well-structured questionnaire to elicit the perception of shareholders regarding the importance of financial statements for investment decision making and also their discernment of the adequacy of the content of financial statements. The two hypotheses formulated in the course of the study, were tested by the use of ANOVA test and the Likelihood Ratio Test, and otherwise referred to as G-test or maximum likelihood statistical significance test. The results of the empirical tests show that Stockholders do possess the requisite technical and professional skills to analyze IFRs financial Statement. And that Stakeholders in financial reporting in Nigeria do rely on the Financial Information disclosed in financial statements for investment decision making. We recommended inter alia that stakeholders should in addition to the accounting figures in the financial statement, compute ratio, trend and common size analysis in order to secure deeper information. Secondly, investors should not be unaware of the possibility of the use of creative accounting techniques by directors, in painting a distorted picture of the state of health of the reporting entities. Additionally, investors should be mindful of the fact that financial statements are historical in nature. Since the past do not always paint a perfect picture of the present or future, investors should in addition to financial statements analysis, investigate the internal and external environment of the reporting entities before arriving at a final investment decision.

Adeyemo Kingsley Aderemi, Isiavwe David, Adetiloye Kehinde Adekunle, Eriabie Sylvester

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