INVESTORS PERCEPTION OF PUBLISHED FINANCIAL STATEMENT (A CASE STUDY OF SELECTED INVESTORS IN ABA). A RESEARCH PROJECT MATERIAL ON ACCOUNTING
The aim of this research is to examine investor’s perception of published financial statements. A total of fifty (50) investors were examined for the purpose of this study however, forty (40) responded positively, giving this project 80% response rate. Financial statement is a prerequisite for accessing the financial performance of the firm an investor wishes to invest his resources.
It is the primary source through which shareholders are informed on the activities and operations of the companies in which they own shares. It was discovered that most investors do not consider if necessary to read through the financial statement before making investment, which at times result to poor financial inflows to the investors. It was also discovered that most investors could not interpret appreciate the financial statement as a result terminology and their low educational status. These classes of people who finds it difficult to understand the financial statement should always employ the services of financial analysis for advice.Areas of concern on the course of putting up this project report consisted investors in construction, petroleum, textile, Engineering, Real Estate, and Banking industries in Aba town of Abia state. Findings also revealed that they examine and consider the profit and loss account as the major area for investment decisions. However, the researcher therefore recommends that, investors should not only depend on the profit and loss account of firms but should also inspect other areas such as, source and application of funds, five year financial summary, the chairman’s and Director’s report, and the balance sheet.
In Nigeria today, it is not common as in some countries for people who are otherwise ignorant of the principles of accounting and financial management to find themselves on the boards of companies where a sound knowledge is highly desirable from financial expert. Investors who must have the best out of their investment decision must of necessity have adequate knowledge of relative performance of the companies in which they have or intend to hold securities.
To investors, the annual financial statement is a valid source for understanding of the financial status of a company and its operations. Failure on their part to understand and reasonably analyze the information contained in the financial statement would normally lead to poor investment or inefficient allocation of scarce resources.