Recession and value relevance of accounting information of listed deposit money banks in Nigeria

Abstract

This study investigated the effect of economic recession on the value relevance of accounting information of deposit money banks (DMBs) in Nigeria. Secondary data sources obtained from the published financial statements of the sampled listed DMBs and the NGX website for the period ranging from 2012 to 2021 were used for analyses. Panel data techniques (fixed and random model effects) were employed. Earnings per share (EPS), book value per share (BPS) and financial leverage (LV) were used as independent variables while market price per share (MPS) served as dependent variable. Findings of the study reveal that the pre-recession era was relatively more value relevant than the post-recession era. Furthermore, in the prerecession period, only earnings per share (EPS) is significant; showing that EPS contains information capable of explaining the value of share price. For the post-recession period, it can be seen that the other two accounting proxies; book value and firm size are all significant
meaning that in spite of the economic recession experienced in Nigeria the two accounting numbers possess the ability to explain share prices.