Optimizing Investment Decisions Through Informative Accounting

There is growing pressure around the world to promote greater transparency and disclosure, consistent with the importance of the growth of world trade and investment. From the study, we discover that the quality of accounting information in terms of its accuracy, adequacy, reliability, and mode of disclosure is a major determinant of the level of efficiency of the capital market and other decision tasks. This study employs a total of 50 companies quoted on the Nigerian Stock Exchange (NSE). However, the final sample cuts across 17 out of the 21 sectoral classifications for the period 1986 to 2004. Two sets of data were collected that predicted values of the relevant performance indicator over the projection period as presented in the prospectus of each company. The second set of data is the Actual Values of the indicators up to three years of operations after public issue. The findings in this study suggested among other things, that the current level of adequacy of accounting information made available to potential and existing investors requires significant improvement. In conclusion, there is need for relevant regulatory agencies to alert investors on the extent to which they can rely on the accounting information provided in financial/corporate reports, as a basis for making their investment decisions, while specifically disclosing the limitation of such accounting information being provided