LEASE ACCOUNTING AND VALUE RELEVANCE OF LISTED NON-FINANCIAL FIRMS IN NIGERIA

Abstract

The broad objective of the study is to examine the effect of lease accounting on the value relevance of listed non-financial firms in Nigeria. The study specifically examined the effect of lease accounting on the book value per share and price-earnings of listed non-financial firms in Nigeria. The study adopted the expost facto research design. The population was comprised of non-financial firms listed on the Nigerian Exchange Group (NGX).  A total of ninety - five (95) non-financial firms listed on the Nigerian Exchange Group were identified as of 31st December 2022. The study employed a purposive sample of seventy-four (74) non-financial firms. The study relied on secondary data from annual reports and accounts covering a period of 11 years (2012 – 2022). The data were analysed using Ordinary Least Square (OLS) with the aid of IBM SPSS Ver. 25 statistical software. The results showed that lease accounting has a significant effect on the book value per share; but, does not have a significant effect on price earnings of listed non-financial firms in Nigeria. Based on this, the researcher recommends that managers should be mindful of excessive lease liabilities for their negative effect on BVS. This accounts for the negative effect of lease accounting on the book value per share and shareholders should constantly evaluate the degree of lease liabilities in the annual financial reports of a company. This is because the recognition of lease assets and liabilities on the SoFP results in an increase in the company’s total assets and total liabilities.