Covid-19 Pandemic and Value Relevance of Accounting Information of Listed Deposit Money Banks in Nigeria

Abstract

The study examined the impact of COVID-19 pandemic on the value relevance of accounting information of the quoted deposit money banks in Nigeria. Given the unprecedented level of shocks the pandemic has caused in the global financial market, it is considered imperative to investigate the market reactions as a result of the pandemic. It used censures sampling of all the 14 deposit money banks quoted on the Nigerian Exchange group between 2017 and 2022. The data collected were subjected to descriptive analysis, correlation analysis and a panel multiple regression analysis to investigate possible effects of COVID-19 pandemic on the value relevance of accounting information. The results revealed that COVID-19 pandemic has impaired the usefulness of accounting information in investors’ decision making. In addition, the study reported a decline in explanatory power of earnings and book value of equity in post pandemic period, thus the value relevance of accounting information declined significantly as a result of COVID-19 pandemic and related economic lockdown. The results documented that the economic lockdown as a result of COVID-19 pandemic lowered the appropriateness of accounting figure which consequently led to declining value relevance of accounting information. Therefore, the study recommended that policy makers such as the financial reporting council of Nigeria should strengthen policies that will improve the information content of the book value of equity and earnings per share in the financial statement in order to continue to make it significantly relevant to investors in their investment decision making and in addition, preventive and curtaining measures must be put in place to cushion the impact of pandemic on share prices in order to enhance investors’ confidence.