Accounting Estimates and Market Based Performance of Listed Firms in Nigeria: A Panel Data Approach

Abstract

The study investigated the effect of accounting estimates on market based performance of listed firms in Nigeria. The population of the study was thirty-three firms in the Consumer and Industrial Goods Sector of the Nigerian Exchange Group. The study was anchored on the Agency theory. The research design was employed in the study was the ex post facto research design. Depreciation, intangible assets, current tax, and pension liability estimates were used as the dimensions of the accounting estimates (the predictor) while market based performance (the dependent variable) was measured using market price per share. The study used the convenience sampling technique to select a sample of 25 listed consumer and industrial goods companies’ in Nigeria. The data collected and used for the study was for a period of 7 years from 2013 to 2019. The Panel Multiple Regression Technique was employed in testing the hypotheses formulated. Descriptive and correlational analysis were also carried out. The results of the F- statistics indicated that accounting estimates were significant in predicting market based performance at 5% significant level. The results further showed that depreciation estimates negatively affect the way market performance is measured. Secondly, the estimated amount of intangible assets does not significantly affect the market performance of listed consumer and industrial goods firms. Thirdly, current tax estimates have significant positive effect on the market prices of the listed consumer and industrial goods firms in Nigeria, therefore, firms should be mindful when estimating current tax, as this could affect the way their performance is measured. Finally pension liabilities estimates do not have significant effect on market value, and therefore firms should continue to use the valuation methods suggested in the accounting standards.

Keywords

• Accounting Estimates
• Market Performance
• Market price per share

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