Normative Accounting Theory and Investment Decision in Selected Listed Manufacturing Companies of Consumer Goods in Nigeria

Sunday Adekoya Ibo and Rachael Ifeoluwa Olasupo
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Sunday Adekoya Ibo: Federal Polytechnic, Ile-Oluji, Ondo State, Nigeria
Rachael Ifeoluwa Olasupo: Federal Polytechnic, Ile-Oluji, Ondo State, Nigeria

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 8, 2196-2212

Abstract: This study employs an ex-post facto research design to investigate the relationship between normative accounting theory and investment decisions in selected listed manufacturing companies of consumer goods in Nigeria. The research focuses on 21 consumer goods firms listed on the Nigerian Exchange Group from 2014 to 2023. Data derived from audited financial statements are analyzed using descriptive statistics and panel regression techniques, specifically the Fixed Effects Model (FE). The study finds that while variables like net worth and earnings per share (EPS) demonstrate positive influences on shareholders’ stake (SHS), their statistical significance varies. Firm age emerges as a significant factor positively affecting SHS, whereas firm size shows a negative influence, albeit not statistically significant. Normative accounting theory explains a substantial 98.4% of the variability in investment decisions, underscoring its pivotal role in guiding financial practices and enhancing transparency. The findings contribute to understanding how theoretical frameworks shape corporate strategies and investor relations in Nigeria’s Consumer Goods sector. The study recommended that the company should enhance disclosure practices to promote transparency, educate investors on normative accounting principles, ensure continuous compliance with regulatory standards, integrate sustainability reporting, benchmark against industry standards, engage stakeholders for feedback, and support further research on normative accounting theory’s impact on emerging markets.

Date: 2024
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