Value Relevance, Quality of Financial Statements, and Investments in Deposit Money Banks

Abstract

This study examined the value relevance of financial statement quality and investment decisions. The study adopted a descriptive research design and used a questionnaire as the study instrument. The study surveyed all the deposit money banks in Nigeria having regional offices in Asaba, Delta State. The researcher employed the proportional allocation approach, and the sample size consists of one hundred and twenty-six (126) managers, finance managers, accounting managers, and board of directors. Spearman’s rank order correlation was employed as the statistical tool for testing the direction and strength of the hypothesized accounting relationships. All the statistical analyses were done with the aid of SPSS version 20.0. The study found that the value relevance of financial statement quality has a positive and statistically significant relationship with investment decisions through investment in shares and bonds, with investment in bonds exhibiting the strongest relationship with the value relevance of financial statement quality. The study concluded that the value relevance of financial statement quality is imperative for investment decisions on shares and bonds. The study recommends that deposit money banks should consider whether they need to enhance the quality of their financial statements in order to encourage their stakeholders' interest in investing in bonds and share based on their value relevance.