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Pyrex Journal of Taxation and Accounting Management

August 2017 Vol. 1(2), pp. 24-34

Copyright © 2017 Pyrex Journals




Full Length Research Paper


Accounting Information and Bond Market Liquidity Evidence from Nigerian Capital Market 2003-2012


Uchechukwu Godwill Akpu* and Samuel Ojo Iwene

Accounting Information and Bond Market Liquidity Evidence from Nigerian Capital Market 2003-2012

Corresponding Author E-mail: ucheakpuh2005@yahoo.com

Accepted 24th August, 2017



Abstract


The study is an empirical examination of the causal connection between quantitative accounting information and bond market liquidity on one hand and qualitative attributes of accounting information on the other. The study is motivated by the perceived underperformance of the Nigerian domestic bond market, and therefore, investigates whether accounting data published by corporate and government entities conveys information that will affect bond liquidity thereby impacting on the performance and development of the Nigerian domestic bond market. A Correlation and casual comparative (Ex-post Facto) designs were adopted. Ten years’ published accounting data and bond market turnover of 5 state governments and 5 corporate bonds listed on the bourse of the Nigerian Stock Exchange were extracted for the period 2003-2012. Survey data of eight qualitative accounting information attributes were also obtained from 275 respondent stakeholders in the Nigerian bond market using researcher-designed questionnaire validated by experts and shown to have a reliability coefficient of .846. Data were analyzed using multiple regression techniques with the aid of Statistical Package for Social Sciences (SPSS). The findings from the study suggest that quantitative accounting information (DEBTR, INTCR and CURR) variables were shown to have a significant influence on bond market liquidity explaining about 95.2% of changes in the bond market liquidity performance indicator which suggest that published accounting data affects the liquidity of domestic bonds. While a significant variation of about 84.5% explained by qualitative accounting information attributes. This suggests that bond market liquidity is significantly predicted by qualitative accounting information attributes such as Relevance, reliability, comparability, completeness and faithful representation. The result exposed the paucity of accounting information of the high rate of creative accounting practices by government and corporate bond issuers which tend to impair transparency, probity, accountability, and loss of confidence by users of accounting data in the Nigerian bond market. Furthermore, the untimely and in most cases non-disclosure of financial statements by government entities whose bond issues are the dominance of the Nigerian bond market hinders the development and performance of the domestic bond market. The work, therefore, recommends that government and corporate bond issuers should compulsorily disclose at least 10 years’ financial statements to the investing public before accessing the bond market, with strict compliance to post listing regulation requirements of the statutory authorities through the Nigeria Stock Exchange X-issuers portal.

Keywords: Accounting Information, Bond Market, Liquidity, capital market.

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