MODERATING EFFECT OF LEVERAGE ON THE VALUE RELEVANCE OF ACCOUNTING INFORMATION IN THE NIGERIAN LISTED OIL AND GAS FIRMS
DOI:
https://doi.org/10.57233/gujaf.v1i1.19Keywords:
Value relevance, Earnings per share, Book value per share and LeverageAbstract
The study investigates the moderating effect of leverage on the value relevance of accounting
information in the Nigerian listed oil and gas firms. The study used correlational research design
and the data was extracted from the published annual financial reports of the firms for the
independent variables and the moderator. On the other hand, the data for the dependent variable
(share prices) was collected from Nigerian stock exchange website. A sample size of 6 firms were
used for a period of eight years (2011-2018). The data was analysed using multiple regression
analysis. Findings from the analysis showed that earnings per share, and leverage to be value
relevant. Additionally, book value per share moderated with leverage was value relevant in addition
to earnings per share moderated with leverage as well. Based on the findings, the study recommends
that listed oil and gas firms in Nigeria should strategize to improve their earnings, Moreover, they
should also find way of managing their book value, as any unnecessary investment means negative
effect on share price. Additionally, listed oil and gas firms should maintain an appropriate level of
leverage so that the cheap cost of leverage will reduce the weighted average cost of capital and
subsequently increase value to investors. Finally, the explanatory power of the moderated variables
are more than the ones not moderated.