FINANCIAL REPORTING QUALITY AND INVESTMENT DECISIONS IN LISTED MANUFACTURING FIRMS IN NIGERIA

The study examined the effect of financial reporting quality on investment decisions in listed manufacturing firms in Nigeria. The specific objectives are to; determine the effect of earning quality on investment decisions of manufacturing firms listed in Nigeria; assess the effect of accounting conservation on investment decisions of manufacturing firms listed in Nigeria; and investigate the effect on timely loss recognition on investment decisions in manufacturing firms listed in Nigeria. The study use data from annual financial statements published between the periods of 2013 to 2022. Also, unit root testing and co-integration were used as the pre-test technique; while, panel data, fixed effect result, random result, fixed effect result and Hausman’ test were applied for the formulated objectives. The descriptive statistics revealed that listed Manufacturing Corporation in manufacturing firm witnessed high return on investment through investment decisions judging from financial reporting quality (FPQ). The median value implying that reported earnings listed manufacturing corporation increase the rate of ROI witnessed in the study years. The maximum value showed that the highest contributing variable came from earning quality (EAQ); while that of the lowest minimum value came accounting conservation (ACM).The Levin, Lin & Chut, Im, Pesaran and Shin W-stat and ADF - Fisher Chi- unit root techniques demonstrated that return on investment (ROI), accounting conservation (ACM), timely loss recognition (TLR)) and earning quality (EAQ) were integrated at order one and at level. Kao co-integration technique test confirmed a long-term association between the variables. Hence, indicating a long-term connection between return on investment (ROI), earning quality (EAQ) and accounting conservation (ACM), timely loss recognition (TLR). The result from the Random technique showed that earning quality (EAQ) and accounting conservation (ACM) were significant at 5% significant level and directly related to return on investment (ROI); while, timely loss recognition (TLR) was positively related to return on investment (ROI) but non-significant at 5%. This suggests that 1% increase in earning quality (EAQ) and accounting conservation (ACM) brought about 5.2% and 0.9% increase in return on investment (ROI) respectively; timely loss recognition (TLR) had zero effective on return on investment (ROI). It is recommended that management of manufacturing organization, especially ones within the manufacturing sector should ensure that their respective financial reporting provide valuable knowledge for decision-making with respect to the standard of financial statements through complying within commonly agreed accounting standards. This is necessary in order to ensure that financial reporting of the manufacturing organization is consistency with reality and quality, and ensure that market investors are properly informed in order to make sound investment and credit decisions, the organization should ensure that their income reflects the economic reality through minimizing risk and maximizing profit which aid participants’ investors in the formation of financial judgments. This is necessary in order to reduce low income quality, that erodes the high chances of earning investors’ trustworthiness in creating reasonable investment predictions and judgments on the organizations and also, management should ensure that their respective accounting conservatism capture accountants’ tendency that requires a higher degree of verification in recognizing gains accrue to the manufacturing firms than for losses in the financial statement. This is essential because accounting conservatism may minimize asymmetry information of knowledge between managers and shareholders, and lower agency costs, thereby improving shareholder protection and business value.