Effect of Liquidity and Profitabilty on Value Relevance of Listed Financial Companies in Nigeria

ABAKU Boma, FCA, Fcti., Fca. Dr VERR Bernard and Prof NDEM Ayara Ndiyo
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ABAKU Boma, FCA, Fcti.: Department of Accounting, Faculty of Management and Social Sciences, Base University Abuja, Nigeria
Fca. Dr VERR Bernard: Department of Accounting, Faculty of Management and Social Sciences, Base University Abuja, Nigeria
Prof NDEM Ayara Ndiyo: Dean of the Faculty of Social Sciences, University of Calabar, Nigeria

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 2, 696-712

Abstract: The Nigerian financial sector has witnessed significant growth and transformation over the past decade, contributing significantly to the country’s economic progress. Consequently, this study is undertaken to examine the effect of profitability and liquidity on the value relevance of listed financial companies in Nigeria for the period of ten years 2012 to 2021. Profitability and liquidity are the independent variables while TOBIN’s Q is the proxy for value relevance as the dependent variable of the study. The debt-to-equity ratio was used as the control variable. Value Relevance theory is the theory used to underpin the work. The study adopted a quantitative research design and data for the fourty listed financial companies were sourced from the published financial statements of the companies. Multiple regression with the aid of STATA 16 application software was used in analyzing the data. The study outcome revealed that profitability and liquidity significantly affected the value relevance of listed financial companies in Nigeria. The study recommends that Management should pay more attention to profitability and liquidity as it enhances the value relevance of listed financial companies in Nigeria. The study suggests further studies to be domiciled in listed non-financial companies in Nigeria.

Date: 2024
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